In an unexpected twist, Bitcoin’s (BTC) performance correlation with U.S. stock markets has fallen near zero levels, the lowest in two years, according to Block Scholes, an analytics firm that monitors crypto derivatives. This turn of events has implications for crypto traders whose assessments are exclusively focused on traditional market sentiment and macroeconomic trends – they might be let down.
This change in correlation has occurred as both classic and crypto assets have clawed back the losses endured during last year’s tightening cycle. Furthermore, this development might underline two somewhat contradictory conclusions. On one hand, it suggests that Bitcoin is striking out on its own, unmoored from its traditional stock cousins. Meanwhile, on the other hand, it may signal Bitcoin’s growing decoupling from broader investing sentiment.
Among contributing factors to this development are proposals for spot Bitcoin exchange-traded funds (ETFs) by major actors such as BlackRock, Fidelity, Invesco, and WisdomTree. The crypto markets have responded to these filings with optimism. In particular, Bitcoin rewarded such enthusiasm with a return of around 25% following BlackRock’s filing, unperturbed by the stoicism exhibited by traditional U.S. market indices.
This ETF narrative’s ongoing evolution can be dissected into three stages: anticipation for the launch, flows after the ETFs roll out, and the final affirmation of crypto as an asset class. Ilan Solot from Marex Solutions speculated that traditional investment product flows in the coming months could be key in ascertaining the narrative’s third chapter.
However, it is worth noting that interest in these ETFs has climbed up, possibly to the chagrin of naysayers. As evidence, Bitcoin exchange-traded products globally have seen inflow of over 13,822 BTC since BlackRock’s announcement till the end of June.
So, what is the takeaway from this intriguing dance of Bitcoin and traditional stock markets now estranged? While it’s true that the ETF narrative is the one currently pulling the puppet strings, we should remember that factors like potential fiat liquidity pressures still demand our attention. We must also remind ourselves that Bitcoin’s decoupling from traditional markets doesn’t imply it’s become immune to worldly economic influences. Now changing hands at $30,830, as per CoinDesk data, will Bitcoin pursue its path as an independent operator or find itself once again tethered to the vagaries of broader markets? Only time will reveal the answer.
Source: Coindesk
