- 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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
US presidential election outcome could shape the future of crypto
US citizens will go to the polls to elect a new president on November 5, and their choice could be key for the future of the crypto industry and thus the price outlook for Bitcoin (BTC).
Bitcoin ETFs beat Gold ETFs with 65% gain since launch
Bitcoin ETFs have reshaped the digital asset investment landscape since their approval in January. Their total assets under management climbed over $70 billion during the weekend, placing them ahead of other investment products, including gold.
XRP eyes 10% rally amid relisting across crypto exchanges and growing institutional demand
Ripple's XRP is trading at $0.5050 up slightly by 0.2% in the past 24 hours as it struggles to sustain a move above a key symmetry triangle resistance. Meanwhile, in its recently released Q3 report, Ripple noted the rising listing and relisting of XRP across crypto exchanges and global platforms.
Ethereum Price Forecast: ETH struggles below $2,500 amid State of Michigan pension fund investment in ETH ETF
Ethereum is trading near $2,420, down about 1% on Monday, but could bounce off a key descending trendline close to the $2,258 historically high demand zone. Meanwhile, the State of Michigan pension fund revealed an investment of $11 million in ETH exchange-traded funds.
Bitcoin: New all-time high at $78,900 looks feasible
Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.