Why the iShares Bitcoin Trust ETF (IBIT) Is Outperforming the S&P 500 in a Risk-Off Market

Bitcoin surged past the $90,000 mark on Tuesday, hitting its highest level in over a month, while the $50 billion iShares Bitcoin Trust ETF (IBIT) gained over 4%, closing in on its breakeven point for the year. Meanwhile, the Vanguard S&P 500 ETF (VOO), widely regarded as a benchmark for the broader stock market, remains down 10% year-to-date. The once-booming tech sector has also seen a steep 17% decline as of Tuesday.

Despite concerns over trade war escalation and heightened market uncertainty, Bitcoin ETFs like IBIT are defying expectations and outperforming U.S. equities. The world's most valuable cryptocurrency seems to be breaking away from its association with high-risk speculative assets, aligning itself more closely with the profile of a safe-haven investment.

Bitcoin ETFs Acting as "Digital Gold"

In recent months, Bitcoin has demonstrated characteristics similar to traditional safe-haven assets like gold, diverging from the tech-heavy Nasdaq-100 and broader equity markets. While its performance remains far below that of precious metals, Bitcoin is finally living up to its "digital gold" reputation.

Reasons Behind IBIT's Outperformance

Scarcity and Decentralization Bitcoin's capped supply of 21 million coins and decentralized structure appeal to investors looking for assets less vulnerable to inflation and centralized economic policies.

Institutional Interest IBIT's rapid growth, reaching $50 billion in assets under management faster than any other ETF, reflects increasing institutional adoption and confidence in Bitcoin as an investment vehicle.

Comparative Resilience During recent sell-offs, Bitcoin has displayed resilience comparable to gold and long-term Treasury bonds, particularly on a risk-adjusted basis.

What It Means for Investors

The strong performance of Bitcoin ETFs in 2025 suggests shifting perceptions of the cryptocurrency as a safe haven during volatile times. Still, Bitcoin’s high historical volatility keeps some investors cautious. For those looking to gain exposure to this emerging asset class, spot ETFs like IBIT offer opportunities but should be considered within the context of overall portfolio strategy and risk tolerance.

Bitcoin’s evolving status may continue to influence broader market trends, but its role as a reliable safe-haven asset remains a subject of debate among investors and analysts.