Bitcoin held strong despite a downturn in global stocks, maintaining a more than 19-month high, signifying its detachment from traditional assets. It climbed 0.4% to around $42,200 by 10:28 a.m. in New York on Tuesday, marking a surge that propelled it above $40,000 for the first time since May 2022. In contrast, traditional market indicators for global stocks and bonds have been in decline since the week’s commencement.
The divergence illustrates the presently low correlation between cryptocurrency and conventional macro assets. This deviation has been evident in Bitcoin’s detachment from stocks and gold, attributing to its impressive 152% surge this year. Anticipation of the US greenlighting its inaugural spot Bitcoin exchange-traded funds has been a major catalyst for this growth, potentially broadening the token’s demand. In contrast, other cryptocurrencies like Ether, Dogecoin, Avalanche, and Polygon faced declines.
The correlation coefficients for Bitcoin with MSCI Inc.’s global stocks index and spot gold have significantly dropped compared to the year’s start, indicating reduced synchrony between assets. The crypto industry’s outlook is influenced by regulatory shifts, with signs suggesting a possible easing of the US crackdown on the sector.
Recent incidents involving key figures like Sam Bankman-Fried and major platforms like Binance facing penalties have prompted a sense that US authorities have already made significant interventions. Technical indicators hint at Bitcoin’s rally possibly reaching an overbought state, although hopes for SEC approval of US spot Bitcoin ETFs and bets on Federal Reserve interest-rate cuts fuel speculative interest.
Increased trading volumes in November, as reported by Robinhood Markets Inc., are another indicator of escalating interest in cryptocurrency. The future of Bitcoin’s rally may hinge on the forthcoming decision regarding the spot ETF, according to insights from research provider Kaiko.
