Stock markets sit at record highs. Gold and silver continue their ascent. Geopolitical tensions simmer across multiple continents. And yet bitcoin, the asset built for precisely such conditions, continues to hover around $90,000. For an instrument designed to thrive amid eroding trust in fiat currencies and rising demand for non-sovereign stores of value, this is curious. The question worth asking: is bitcoin poised for a catch-up rally, or has the market rendered its verdict?

 

The Fed Under Fire

Last week brought an unusual spectacle. Jerome Powell, the Federal Reserve chairman, addressed grand jury subpoenas served by the Department of Justice, ostensibly concerning congressional testimony about the Fed’s headquarters renovation. Mr Powell was uncharacteristically blunt, calling the action unprecedented and suggesting it amounted to political pressure to lower interest rates in line with the administration’s preferences rather than the Fed’s independent assessment.

The implications are significant. If the central bank’s autonomy is seen to be compromised, confidence in the dollar as a neutral reserve currency may fray. When the institution responsible for setting the price of money becomes a political instrument, investors must ask themselves: where does one hide?

 

The Metals Trade

Thus far, the market’s answer has been emphatic: precious metals. Gold and silver have reached multi-year highs relative to equities. Bitcoin, despite its frequently invoked moniker of “digital gold,” has failed to attract the same bid.

This is puzzling. In theory, bitcoin possesses properties superior to gold during periods of political instability: it is more portable, infinitely divisible, trivially verifiable, and provably scarce. Yet selling pressure from long-term holders and a slowdown in institutional inflows through exchange-traded funds have kept prices subdued while capital chases physical metals.

A rotation, however, may not be far off.

 

Geopolitics and Hard Money

The geopolitical backdrop grows more fraught by the week. American interventions in Venezuela, persistent tensions in the Middle East, and the Trump administration’s curious fixation on Greenland all contribute to an environment of heightened uncertainty. History suggests that such regimes favour the hardest forms of money.

Bitcoin, as a neutral, borderless, and seizure-resistant asset with no single point of failure, should theoretically shine in these conditions. A positive feedback loop is conceivable: rising geopolitical risk prompts allocators to reconsider bitcoin, driving flows and price appreciation, which in turn reinforces perceptions of it as a safe haven.

 

The Liquidity Equation

There is also the matter of liquidity. Bitcoin has historically demonstrated sensitivity to global liquidity conditions and an inverse relationship with dollar strength. Both factors may soon tilt in its favour.

The administration’s hostility toward Mr Powell is no secret. Should efforts to remove him through legal channels fail, his term expires in May regardless. A successor more amenable to the White House’s preference for lower rates and a hotter economy seems likely. The consequences for bitcoin could prove favourable on two fronts: expanded liquidity in financial markets, and diminished confidence in the dollar, potentially driving investors toward credibly neutral alternatives.

Whether bitcoin finally assumes its intended role remains to be seen. But the conditions for it to do so have rarely looked more propitious.

 

The case for bitcoin, on paper, has rarely looked stronger. A politicised Federal Reserve, eroding confidence in the dollar, rising geopolitical tensions, and the prospect of easier monetary policy ahead, these are precisely the conditions the cryptocurrency was designed to exploit. Yet markets have thus far demurred, preferring the familiar refuge of gold and silver to the digital alternative. Will this hesitancy prove temporary?  For now, the jury remains out, but the trial, at least, is underway.