Despite institutional adoption, ETF approvals, and renewed regulatory clarity, Bitcoin (BTC) has dropped more than 25% from its peak, wiping over $1 trillion from the broader crypto market.
A recent Economist feature highlighting “crypto fragilities” has sparked debate among analysts over whether this marks a structural weakness or a cyclical bottom.
However, Coinbase‘s (Nasdaq: COIN) head of institutional research David Duong thinks Bitcoin’s recent underperformance actually reinforces its long‑term diversification role despite what The Economist wrote.
TheStreet Roundtable host Scott Melker noted how the article resonated beyond crypto circles, adding that even non‑crypto friends shared the piece.
“It makes some very interesting points… Despite these long‑fought wins, Bitcoin has plunged more than 25% from its highs.”
Melker questioned the report’s claim that Bitcoin remains correlated with broader risk assets.
“Everything else — gold’s gone up, stocks have gone up, everything else is up, and we’re actually down. So where’s that correlation?” he asked.
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Duong countered that Bitcoin’s recent underperformance actually reinforces its long‑term diversification role.
“Back in mid‑2023, I wrote a paper about how Bitcoin provides a diversification sleeve in your portfolio,” he said.
“That diversification means that at moments like this, when other things might be going up and Bitcoin’s going down, the inverse holds true later — that’s precisely the point.”
Related: Analyst warns Bitcoin could drop to $10K, as price crashes to $86K
Duong added that mainstream coverage can signal inflection points.
“When something ends up on the cover of The Economist, that generally means it’s either the top or the bottom. So when I see something like that, that’s another line for me — a bottom indicator.”
Melker agreed, likening The Economist to “the mainstream investor’s equivalent of your Uber driver giving market tips.”
He pointed to on‑chain data showing renewed whale accumulation.
“The number of entities with a balance of 1,000 Bitcoin or more has absolutely skyrocketed on this dip.”
Duong concluded that “smart money is definitely trying to buy back into this at better levels,” but warned that selectivity is key.
“We’re not in the froth period where everything does well — only assets with strong, idiosyncratic stories will benefit.”
Related: Cathie Wood’s Ark Makes 3 Bold Bitcoin Predictions