31 May 2022
An early sign of decoupling?
U.S. equities saw a strong recovery last week while bitcoin remained flat. Early signs of decoupling or BTC just lagging?
Last week, U.S. equities saw a strong recovery, as the S&P 500 saw a 6.5% gain while Nasdaq gained 7%. Meanwhile, BTC wrapped up its ninth consecutive red week. Is this a signal of a decoupling?Following last week’s dull price action, BTC has recovered strongly, seeing a 9% gain since the Sunday close. In the same period, the S&P 500 and Nasdaq futures have been flat.
Bitcoin has thus regained the strength relative to equities, however, with a considerable lag. Nevertheless, this lag and bitcoin behaving more independently to the U.S. equity markets could signal that the unnaturally elevated correlations are breaking. In the coming weeks, more macro events await that have previously led to surges in correlations between bitcoin and U.S. equities. U.S. May inflation numbers will be released on June 10th, while the next FOMC interest rate decision will be presented on June 15th. It’s too early to assume that BTC is freed from its strong leash to the U.S. equity market, but the price action during and following these events might illuminate whether the correlations are actually starting to break.