Bitcoin is up 6% in the past 24 hours and over 18% this past week as it continues to rally higher amid a sell-off in the stock market.
Marcus Sotiriou, an analyst at UK-based digital asset broker GlobalBlock, says Bitcoin’s big move has seen the benchmark crypto “decouple” from the stock market.
In a note on Tuesday, Sotiriou said that BTC’s “incredible” gains this week are a signal that the market could be looking at a potential decoupling from stocks. This, he notes is likely to be the outlook in the short term.
Indeed, looking at the stock market, we see the S&P 500 is headed for another negative daily close with losses above 1.5% on Tuesday.
Why is Bitcoin up today?
Commenting on the recent correlation between Bitcoin and stocks, the GlobalBlock strategist said that this had been the case “for months.” However, the cryptocurrency is signaling what could be an uncorrelated breakout, albeit possibly a short-term one.
And on why Bitcoin is rallying as the S&P 500 falls, Sotiriou explained:
“Bitcoin is being heavily bid due in part to the narrative of being a permissionless and censorship-resistant way of transferring value, as it has been used during the crisis in Ukraine as well as political unrest in Canada.”
But it’s not just stocks that BTC is outshining this week. The flagship crypto is outperforming gold, which last week rallied as Bitcoin fell alongside stocks. Today, despite rallying to highs of $1,945 with over 2% in gains, gold trails BTC’s 6% upside.
“It is [also] fascinating that, after a week into geopolitical uncertainty, Bitcoin is outperforming gold, which is known as a safe-haven asset,” Sotiriou noted.
Can Bitcoin go higher?
Real Vision CEO Raoul Pal thinks it can, pointing to the current crypto market outlook that “feels a lot like March 2020.”
“Back then we threw the worse possible news at it (a pandemic and a global shut down) and it fell very sharply but failed to make a new low,” he tweeted as Bitcoin broke above $44,000.
Pal sees a similar macro picture in the current circumstances with the Ukraine war, higher rates, and surging oil that has hit $105 per barrel. While the 2022 environment is a different time, he thinks Bitcoin’s failure to make a new low suggests “macro might get more positive for crypto.”
But he also urges caution, noting that the end of the tech sell-off could ignite a fresh collapse in crypto.