Bitcoin-stock market decoupling might be happening, and crypto bulls are not happy
Bitcoin (BTC), the world’s largest cryptocurrency, keeps flatlining at press time. It is sitting at $19,643, up 0.433% over the past 24 hours.
Ethereum (ETH), the second largest cryptocurrency, is in the red.
In the meantime, U.S. equities are greatly outperforming cryptocurrencies in what appears to be an unpleasant turnaround for cryptocurrency bulls.
The S&P 500 index is up 1.9%. The tech-heavy Nasdaq index increased 2.2%, extending its bullish streak. Big names such as Amazon, Microsoft and Meta Platforms, are leading the rally. The Dow Jones Industrial Average also jumped sharply higher, adding more than 500 points.
Stocks rallied higher on Monday thanks to impressive earnings. Investment bank stocks outperformed expectations, with Goldman Sachs surging roughly 4%.
The market is now in rally mode once again as earnings season continues.
This optimism, however, could be premature as future rate hikes are on the way. The Federal Reserve is expected to increase the benchmark interest rate by 75 basis points in November. The U.S. labor market remains incredibly resilient despite the Fed’s persistent efforts to cool it down.
Dubravko Lakos-Bujas, head of global macro research at JPMorgan, believes that the performance of equities will largely depend on the decisions of central banks around the globe regarding their monetary policy.
The strong correlation between U.S. stocks and crypto has been the dominant narrative of the past year. Bitcoin has been trading practically in tandem with the Nasdaq index, which is why crypto investors now closely follow macro data in order to navigate the market.