With inflation at its highest level in 40 years and Europe in the background, the first quarter may have shown another short-term uptrend in risky assets, but analysts are inclined to think full-year results this year may not be that easy. Bitcoin, one of the market's leading indicators and riskiest assets, is showing unusual momentum and could be the first to pull out of the trough.

Bitcoin's rally is expected to outlast the stock market

Bitcoin has shown distinctive momentum in 2022 and is poised to break through key resistance around its 50-week moving average on March 28. If Bitcoin is able to hold above $46,300 even as the NASDAQ 100 is still down about 10%, it could mark an inflection point for the benchmark cryptocurrency. Bitcoin is the most widely traded, liquid, round-the-clock risk asset in the world.

Given that the Fed is facing further asset price increases on a daily basis, we think it is showing more concern about related inflation and is inclined to act on it. Bitcoin could be the first to pull out of the trough before a belated mean reversion occurs in risky assets.

If stock market history since bitcoin's birth in 2009 is any guide, the 2022 trough may already be over. As the world deals with COVID-19, fed tapering, and the situation in Ukraine expands, we think it may not be that simple. The chart shows the NASDAQ 100 breaking its 100-week moving average again for the first time since the crash of 2020, before bouncing back. A shake-up more akin to the financial crisis is probably long overdue.

The bottom line for Bitcoin is that it is expected to outperform the NASDAQ 100 in most scenarios. As the world continues to move in that direction, Bitcoin could be poised to become a global digital secured asset in 2022. Bitcoin, which typically fluctuates about three times as much as the Nasdaq, is up about 3% as of March 25, while the Nasdaq is still down 10%.