Bitcoin is leaving stocks behind in performance.
Shares fell ~ 2% across the board yesterday as new concerns over Covid-19 infection rates and outdated stimulus talk emerged. However, amid a red sea of stocks, Bitcoin traded largely unchanged.
After yesterday’s price, stocks barely flattened again this morning as Bitcoin catapulted 2% to 2020 highs of $ 13,400.
The stark difference between Bitcoin and stock performance recently begs the question of whether Bitcoin will decouple from stock markets and further cement it as the preferred store of value business in 2020.
According to Skew.com, the data suggests that the recent correlation between Bitcoin and S&P 500 has dropped to 13.7%, in line with anecdotal observations.
Additionally, Bitcoin and gold have grown together lately, although Bitcoin’s performance has been far superior to that of gold. According to Skew.com, the correlation between Bitcoin and gold rose from negative territory to 23% in October.
The likely driver behind Bitcoin’s decoupling is the uncertainty surrounding the election, where volatility is likely to increase regardless of which candidate wins. Until the cloud of smoke subsides after the elections, Bitcoin and gold should benefit from the growing unease.
In previous articles, Bitcoin fundamentals continued to offer an extremely bullish outlook. More recently, however, the shattered Bitcoin coin days jumped over 50 million, a level not seen since early February and preceded Bitcoin’s gradual decline from mid-February to a possible one-day collapse in mid-March.
Given the small sample size, this finding shouldn’t be given too much weight, but it deserves concern.
Even with Bitcoin’s recent decoupling and strong performance today, a slowdown could emerge as longer-term Bitcoin holders appear to be taking some profits off the table after this recent price hike.
Disclosure: The author owns Bitcoin, Ethereum and Thorchain.