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Bitcoin shrugged off a slide in global markets during a rally to a more than 19-month high, a sign of its decoupling from other assets.
The token jumped 5.8% to scale $42,000 (R790,000) on Monday and was just below that level in morning Asian trading on Tuesday.
In contrast, gauges of global shares and bonds are nursing losses since the start of the week.
“This divergence underscores the current low correlation of crypto with other traditional macro assets,” Sean Farrell, the head of digital-asset strategy at Fundstrat Global Advisors LLC, wrote in a note.
Bitcoin’s correlations with the likes stocks and gold have ebbed in 2023 as crypto-specific factors helped to spur a 152% climb in the largest digital asset.
A key driver of the gains is the expectation that the US will allow its first spot Bitcoin exchange-traded funds, potentially widening demand for the token.
A 90-day correlation coefficient for Bitcoin and MSCI Inc.’s index of world shares has dropped to 0.18 from 0.60 at the start of the year.
A similar study for the token and spot gold shows the figure has declined to about nil from 0.36.
A reading of 1 indicates assets are moving in lockstep, while minus-1 would show they’re moving in opposite directions.
US Outlook
Another industry-specific driver is regulation. Crypto executives are increasingly hopeful that the worst of the US crackdown on the sector is over.
In the past few weeks, Sam Bankman-Fried was jailed for fraud at FTX, while top crypto exchange Binance and its founder Changpeng Zhao were hit with hefty fines after pleading guilty to US anti-money-laundering and sanctions violations.
“The feeling is the US authorities and regulators have really had their say,” Lucy Gazmararian, managing partner at Token Bay Capital, said on Bloomberg Television.
“We could now see more dialogue happening with regulators.”
Some technical indicators, such as a momentum gauge called the 14-day relative strength index, suggest Bitcoin’s rally has become stretched. The index stands at 75, above the 70 level viewed as overbought.
At the same time, speculative interest is being stoked by predictions of a Securities & Exchange Commission green light for US spot Bitcoin ETFs by January.
Investors have also taken heart from bets on Federal Reserve interest-rate cuts next year.
Online brokerage Robinhood Markets Inc. said in a Monday filing its November notional crypto trading volumes were roughly 75% above October levels.
Whether the rally in Bitcoin lasts will “surely become clearer once a decision is reached on the spot ETF,” research provider Kaiko wrote in a note.
Bitcoin fell less than 1% to trade at $41,772 as of 10:45 a.m. in Singapore. Other virtual currencies such as Ether and BNB posted small moves.
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