Bitcoin, gold shine as US Dollar sinks – Is crypto finally breaking free from stocks?
- Bitcoin decoupled from U.S stocks and followed gold’s ‘safe haven’ rally
- The Trump-Fed feud may be partly responsible for investors’ flight from U.S dollar assets
Bitcoin [BTC] decoupled from U.S stocks last week and maintained the trend earlier this week. In fact, over the last five trading days, the cryptocurrency has rallied by 5%. It went on to tap $90k during Tuesday’s early morning trading session.
Over the same period, the S&P 500 Index (SPY) fell down by 5% while tech-heavy Nasdaq slipped by 6%.
Source: Google Finance
A major decoupling?
Well, this hasn’t always been the case since BTC had been moving alongwith U.S equities as a risk-on asset since February.
According to the BTC Pearson Correlation (30-day) indicator, the crypto’s positive correlation to U.S stocks strengthened from late February.
Source: The Block
However, from 15 April, BTC decoupled from the S&P 500 and the Nasdaq Composite. Afterwards, it correlated positively with gold, suggesting it began behaving as a ‘risk-off asset’ or ‘safe haven’ trade from mid-April.
In fact, in a recent CNBC interview, market analyst and FundStrat CIO Tom Lee said,
“BTC is going to catch up to gold. Its ATH was over $100K. There’s room to catch up as a non-dollar asset.”
He noted that the recent de-leveraging of U.S dollar-based assets (sell-off) was over and could boost BTC going forward.
For Galaxy Digital’s Head of Research Alex Thorn, Bitcoin’s decoupling trend from U.S stocks is remarkable. However, he warned that it wouldn’t last.
The sustained sell-off in the U.S dollar and U.S stocks has been driven by ongoing threats by President Donald Trump to fire Fed chair Jerome Powell for being “too late” to cut interest rates.
Most analysts view Trump’s move as a breach of Fed independence. This has dented confidence and sparked a mass investor exodus from U.S markets to gold, BTC, and other markets.
For its part, Gold knocked a new all-time high of $3.5k per ounce and BTC pumped harder. In 2025 so far, Bitcoin has lagged behind gold and shed over 35% of its value. Whether the renewed ‘safe haven’ trade will tip it to regain lost ground against gold remains to be seen.
Source: BTC/gold, TradingView