Bitcoin’s in a bear market, but there are plenty of good reasons to keep investing

Let’s rewind the tape to the end of 2021 when Bitcoin (BTC) was trading near $47,000, which at the time was 32% lower than the all-time high. During that time, the tech-heavy Nasdaq stock market index held 15,650 points, just 3% below its highest ever mark.

Comparing the Nasdaq’s 75% gain between 2021 and 2022 to Bitcoin’s 544% positive move, one could assume that an eventual correction caused by macroeconomic tensions or a major crisis, would lead to Bitcoin’s price being disproportionately impacted than stocks.

Eventually, these “macroeconomic tensions and crises” did occur and Bitcoin price plunging another 57% to $20,250. This shouldn’t be a surprise given that the Nasdaq is down 24.4% as of Sept. 2. Investors also must factor in that the index’s historical 120-day volatility is 40% annualized, versus Bitcoin’s 72%, which is roughly 80% higher.

That’s the core reason why investors should re-evaluate investing in Bitcoin. The risk-to-reward potential after the downward adjustment in risk assets possibly leaves more upside for the cryptocurrency considering three factors: higher volatility during a moderate recovery, equity offerings and resistance to regulatory sanctions.

The problem is, the market is now in a drawn out bear trend and there are no signs that point to a quick recovery because double-digit inflation in many countries continues to pressure the Central Banks to sustain a tighter stance. Notice below how both Bitcoin and the Nasdaq have struggled throughout 2022.

The consequence of raising interest rates and removing debt assets stabilization programs is a recession-like environment. Whether or not a soft landing will be achieved is irrelevant because no sane investor will opt for credit-exposed and growth sectors when the cost of capital is increasing, and consumption is contracting.

Bitcoin can crush tech stocks even during moderate recoveries

Volatility is usually interpreted as negative, considering that the movements in price — either up or down — are accelerated. However, if the investor expects some form of recovery over the next 12 to 36 months, there is no reason to believe that Bitcoin will remain under pressure for that long.

Let’s assume a neutral case, such as Bitcoin recovering 25% of the $48,700 drop since the all-time high, while the tech-heavy Nasdaq Index not only recovers the entire 24.4% losses year-to-date in 2022 but adds another 40% gains…