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Bitcoin, equities head in opposite directions and that means…

2min Read

Bitcoin’s 30-day correlation coefficient with popular equity indices like Nasdaq and S&P 500 has turned negative.

What next as Bitcoin and equities head in opposite directions

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  • 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.

 

“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.

Source: IntoTheBlock

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.

Source: Santiment

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Saman Waris works as a News Editor at AMBCrypto. She has always been fascinated by how the tides of finance and technology shape communities across demographics. Cryptocurrencies are of particular interest to Saman, with much of her writing centered around understanding how ideas like Momentum and Greater Fool theories apply to altcoins, specifically, memecoins. A graduate in history, Saman worked the sports beat before diving into crypto. Prior to joining AMBCrypto 2 years ago, Saman was a News Editor at Sportskeeda. This was preceded by her stint as Editor-in-Chief at EssentiallySports.
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