Outperforms stocks and gold with impressive 50% rally

Outperforms stocks and gold with impressive 50% rally

  • Bitcoin and the broader crypto market have shown strong resilience to the recent shake-ups in the global banking space, going so far as to actually shield investors from central bank moves.
  • Bitcoin’s correlation with the Nasdaq 200 falls to a one-year low with the BTC price up 50 percent so far in 2023, the Nasdaq has only gained 12 percent so far this year.

Despite all the uncertainty in the global banking space and visible cracks in the traditional financial system, Bitcoin (BTC) delivered a solid performance with strong gains earlier this week. After a very long time, Bitcoin (BTC) has shown a contrast to the traditional stock markets

On the weekly chart, the Bitcoin price is up over 15 percent while all three major indices on Wall Street have been in negative territory. Amid the continued stress on the banking sector and events like the decoupling, Bitcoin has delivered a remarkable performance. It shows that Bitcoin is building a very strong resilience against external market factors, making an effort to disconnect from the traditional financial system, thus living up to Satoshi’s original conceptual theme.

As of press time, Bitcoin (BTC) is trading at $24,813 levels with a market cap of $479 billion. Although BTC faces major resistance at the $25,000 level, it is still up 50 percent since the beginning of 2023. Thus, Bitcoin has managed to beat not only stock indices, but also popular commodities such as gold. Antoni Trenchev, co-founder of crypto trading platform Nexo, said:

Bitcoin’s 50% rise in 2023 is a reflection of how beaten down it was after the FTX collapse, the changing interest rate outlook and the weakening (and resurrection) of SVB”.

He also spoke about US regulators’ intervention to guarantee customer deposits. The intervention “reminded investors of the structural flaws in the US banking system and the US dollar that underpins it, reasons why we have seen a flight to Bitcoin this week.

Bitcoin shields investors from central bank moves

Several Bitcoin supporters believe that the world’s largest crypto offers investors a way to protect themselves from central bank moves. Excessive quantitative easing and loose monetary policy leads to higher inflation down the track and thus erodes the value of fiat currency. Thus, Bitcoin helps investors protect their hard-earned savings.

As we know, Bitcoin is a decentralized currency that operates on an underlying blockchain technology with the network maintained by a community. Vijay Ayyar, Vice President of Corporate Development and International at crypto exchange Luno said:

The last week’s events surrounding the failure of SVB and other banks have also put the spotlight on the power of decentralized currencies that people can fully deposit and own. Decentralized finance is starting to catch on as a concept to many more people now.

There has been a lot of hue and cry about US regulators having to shut down the banks because of their exposure to crypto. Ark Invest’s Cathie Wood hit out at the regulators, saying: “Crypto didn’t force SVB and Signature into bankruptcy. In my view, Fed policy was the primary culprit. Due to a drought in VC funding and higher returns on money market funds, deposits left the US banking system.

Bitcoin’s correlation to the Nasdaq drops to one year

As said, Bitcoin has outperformed all broader indices on Wall Street, even the tech-heavy Nasdaq with which it shares a greater correlation. While the BTC price is up 50 percent so far in 2023, the Nasdaq has only risen 12 percent so far this year.

The excess returns are clearly visible as the Bitcoin-Nasdaq correlation also falls to a one-year low. According to CoinShares data, the correlation is at its lowest level since the Fed began raising interest rates in 2022.

Courtesy: CoinShares

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