Want to see what’s different in markets so far in 2023? Look no further than the performance of Bitcoin versus bonds.

The cryptocurrency has surged almost 40% so far this year thanks to a general return of risk appetite and the expectation that the Federal Reserve will hit the pause button on hiking interest rates. Of course, those same factors have sparked a rally in bonds — but not enough to offset historic losses incurred last year.

Bond performance, as measured by a variety of exchange-traded funds containing US government debt with higher sensitivity to moves in interest rates, has recovered just a fraction of last year’s losses. The PGIM Total Return Bond ETF is up just 3.43% in January, for example.

Of course, Bitcoin’s dramatic rally over the past month means it’s performing better than almost every ETF out there, let alone bond funds that aren’t expected to produce massive gains. But the chart could nevertheless be something to consider as the Fed gets ready to unveil its latest monetary policy decision this Wednesday.

While the central bank has pledged to keep hiking until inflation is beaten back down to the Fed’s 2% target, financial conditions, which include things like stocks and debt spreads, have been loosening. That’s not necessarily what the central bank wants to see as it continues its fight against price increases.

“Financial conditions could ease or tighten for reasons unrelated to U.S. economic developments and monetary policy,” Dallas Fed President Lorie Logan warned earlier this month. “And to maintain appropriate conditions to achieve our policy goals, it might be necessary to respond with a different policy path.”

This article was provided by Bloomberg News.