Bitcoin Just Flipped a Months-Long S&P 500 Trend: Here’s What Changed

The primary cryptocurrency experienced its most notable price recovery of the year, skyrocketing by 25% from under $65,000 to almost $80,000 within two days before its run was paused, at least for now.

Although this surge is impressive on its own, Glassnode highlighted another notable development that makes it even more interesting: BTC has suddenly started to substantially outperform US stocks after months of doing the opposite.

Finally on the Correct Side

The analytics company said that the cryptocurrency had underperformed the S&P 500 on approximately two out of every three trading days in the past three months. This was more than evident, as BTC failed to initiate any substantial rallies since it was rejected at $83,000 in May. In the meantime, the popular index charted consecutive all-time highs.

Glassnode described this as bitcoin’s longest streak of relative underperformance against the benchmark US index in six years. However, the trend started showing cracks even before BTC exploded on Wednesday afternoon.

On Monday, the index slipped by over 0.5% while bitcoin posted a notable 2% increase. It was one of the rare sessions during the last several months when the cryptocurrency moved decisively in the opposite direction.

The major run on Wednesday, though, confirmed the changing tides. The S&P 500 and Nasdaq snapped a three-week winning streak, posting losses of 1-2%.

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Although BTC has underperformed US equities on most days, it has dwarfed the stock market during its better days, as the magnitude of its excess returns has been considerably larger. The latest deviation is a prime example.

Decoupling?

It would be premature to conclude that there’s a decisive decoupling, as BTC has repeatedly traded as a high-beta risk asset, especially during periods when interest-rate expectations, liquidity, or broader risk sentiment dominate all financial markets.

Nevertheless, the cryptocurrency finally moved in the right direction and in a very impressive manner. Gaining over 25% weekly and reaching a three-month peak while US equities marked their first losing week in a month speak loudly and clearly.

Of course, the most important question now is whether this divergence lasts as one spectacular trading session, even if it went on for a couple of days, is not enough to convince investors to return to the crypto markets. Not yet, at least.