The equity market had consistently outperformed bitcoin since the stock market sell-off in mid-March, but that trend has been reversed on Wednesday.
The digital asset’s return since February 20 bounced back to around -13.85% today, compared to S&P 500’s -14.01%. BTC price also surged above $8,000 in the morning for the first time since March 10 while S&P 500 hit $2,920.
The stock market peaked on February 20 with S&P 500 closed at $3,396. Around the same time, BTC was trading at above $9,600.
Both the equity and the digital asset markets then plummeted on March 13, with BTC return dropping to as low as -50% on March 16 and S&P 500 touched the -35% bottom at the end of March. Since then, the returns for both BTC and S&P 500 had seen steady recovery as their prices climbed up.
Judging from these numbers, it would be hard to argue that Bitcoin has effectively decoupled from the S&P 500. It has effectively failed to function as a hedge during this crisis, at least for now. While it is true that the S&P 500 has far more room to fall than Bitcoin, it would be difficult to imagine the leading cryptocurrency not tumbling with it. Yet, we should bear in mind that these are merely short-term fluctuations.
With worrying macroeconomic indicators, Bitcoin’s halving may also not have an immediate impact on price. Historically, Bitcoin has seen the most rapid price increases long after its halving event, not before or even immediately after.
So, given that Bitcoin still seems closely linked to U.S. financial markets, traders would be smart to take notice of these macroeconomic trends and plan accordingly.