Bitcoin, equities head in opposite directions and that means…
- The decoupling became even more pronounced in Q2 2023 as the price trajectories diverged.
- Bitcoin’s volatility increased following the recent legal actions on crypto behemoths.
Bitcoin [BTC] formed an inverse relationship with tech stocks as sentiment around virtual assets and equities diverged lately.
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A Twitter user, citing data from on-chain analytics firm IntoTheBlock, said that Bitcoin’s 30-day correlation coefficient with popular indices like Nasdaq and S&P 500 turned negative. In essence, this meant that when the price of BTC goes up, the price of the equities will fall and vice versa.
? Look out folks, something's changing! Stocks and crypto are now mostly negatively correlated, meaning as one thrives, the other dives. Data from @intotheblock https://t.co/THDanxmnii pic.twitter.com/lXl7eHOhvt
— Elite ?? (@eliteXBT) June 16, 2023
“Digital gold” is finally here
Proponents of Bitcoin have long positioned it as the “safe-haven asset,” or an investment whose value is expected to be steady or even rise during economic downturns, similar to precious metals like Gold.
To be seen as an inflation hedge by investors, an asset must display significant decoupling from traditional markets. However, with the growing mainstream adoption of cryptocurrencies, Bitcoin and other altcoins became more and more influenced by the geo-political and macroeconomic triggers that affect the mainstream market.
But this has started to change. The spate of banking collapses in March led investors to put their funds in the crypto market. Following this, the world’s largest crypto by market cap, Bitcoin soared 52% until hitting its yearly peak in April, as per IntoTheBlock. On the other hand, equity indices were largely flat until that point.
The decoupling became even more pronounced in Q2 2023, as the crypto market in general and Bitcoin in particular entered a consolidation phase. The king coin fell even more as regulators in the United States became increasingly hostile.
However, the tech stocks went the other way, resulting in a clear divergence in the growth trajectories of the two assets.
It’s not only the equity markets with which BTC started to insulate itself. In recent months, the “digital gold” has shown increased decoupling from its real-world counterpart, Gold [XAU] as well. Bitcoin grew faster in value than the precious metal since the banking crisis of March.
How much are 1,10,100 BTCs worth today?
Volatility starts to rise
BTC exchanged hands at $26,561.18 at the time of writing. The coin gained nearly 4% in the last 24 hours, as per Santiment. Interestingly, after witnessing a protracted period of low volatility, BTC began to live up to its image of an unpredictable asset lately. The volatility increased following the recent legal actions on crypto behemoths by regulators.