- Banking collapse and the tumultuous events of the past week have resulted in a divergence between Bitcoin’s price action and equities.
- Analysts identified Bitcoin’s divergence and assessed whether the asset would start trading as a flight to safety.
- Bitcoin price enjoyed a bullish streak before correcting to the $25,100 level.
Bitcoin’s safe haven narrative lost its relevance in the last bear market, in 2022. The recent divergence between the largest cryptocurrency by market capitalization and US equities. Analysts believe BTC has started trading as a flight of safety for market participants.
Also read: Former President of FTX.US believes bank meltdowns can reshape crypto for traders
Will Bitcoin make a comeback as a safe haven?
While US financial regulators crackdown on cryptocurrency firms and institutions, and crypto-friendly banks collapse, market participants look back at a simpler time when Bitcoin acted as a “safe haven,” a hedge against inflation.
The bear market of 2022 and Bitcoin’s increasing correlation with US equities and tech stocks negated the narrative of a safe haven. After the asset’s recent bullish streak and BTC price hitting a nine month high of $26,000, the narrative is back in play.
Analysts behind the Twitter handle @filbfilb shared the following asset correlation chart in a recent tweet, noting quite a divergence between Bitcoin's price action and that of equities, whereas not the case with Gold, which seems to also have caught a bid.
Correlation between Bitcoin, S&P 500 and Gold
As seen in the chart above, the largest asset by market capitalization has decoupled from the S&P 500 around March 13. As of this week, Bitcoin offers traders respite from corrections in US equities and the “safe haven” narrative is back in play.
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