Bitcoin increases by 25% in the past three weeks, outperforming the S&P 500, raising questions about its potential role as a safe-haven asset.
Bitcoin has witnessed an impressive recovery in the past week, surpassing $91,000 for the first time since early March, after previously dropping below $80,000 in early April. Notably, Bitcoin's price briefly touched $94,000 – equivalent to a 25% increase from the dip on 4/9. Meanwhile, the S&P 500 only increased by about 14% during the same period.
This relative outperformance, along with the gradually decreasing correlation between the two assets, has continued to prompt analysts to question: Is Bitcoin "decoupling" from the stock market?
Correlation indicators like the 30-day Pearson coefficient are typically used to assess this relationship. A coefficient near 1 implies that two assets move in the same direction; near 0 indicates independent movement; and near -1 suggests opposite movements. Notably, in the past three weeks, the 30-day Pearson correlation coefficient between Bitcoin and the stock market has dropped from over 0.80 in early April to below 0.35 currently, indicating a shift from a correlated to an independent state.
However, these correlation indicators should be viewed with a certain caution. The correlation between Bitcoin and stocks – especially indices like the S&P 500 and Nasdaq – has fluctuated significantly over time, showing positive, negative, and even near-zero correlations in different periods.
Bitcoin: The Journey to Becoming a Safe-Haven Asset
When analysts mention "decoupling", they are actually referring to the possibility that Bitcoin is gradually behaving like a safe-haven asset similar to gold, rather than a risky asset like stocks.
In terms of long-term performance, Bitcoin has proven to be the best-performing asset over the past 10 years. Investors who persistently "hodl" (hold) despite fluctuations over a sufficiently long period not only preserve but also significantly increase their net asset value.
On the other hand, Bitcoin's high volatility during "risk-off" events still exhibits characteristics more similar to stocks than traditional safe-haven assets. During market corrections, Bitcoin is often sold off along with other risky assets – which is inconsistent with the role of a stable asset.
For investors with a long-term view of 5 years or more and sufficiently strong psychology, Bitcoin can be seen as a safe-haven asset, although it has not yet fully achieved this status in the short term.
Besides the safe-haven role story, there are other reasons explaining Bitcoin's recent outperformance. One of these is the trend of businesses adopting a Bitcoin treasury strategy – a model known through Michael Saylor's strategy and proven viable by Metaplanet. Currently, there are companies being established solely to operate this model.
Spot Bitcoin ETFs in the US continue to play a solid price support role. Last week, US spot Bitcoin ETFs attracted nearly $1 billion in new capital, demonstrating strong interest from institutional investors.
The shift in US government policy, from confrontation to cooperation with the crypto industry, is likely a long-term structural change. This not only promotes domestic crypto acceptance but also facilitates US-based crypto companies, with Bitcoin being the biggest beneficiary of this new investment wave.
For other crypto assets, most of the crypto market increased this week: Ethereum rose 11%, Solana (SOL) increased 13%, Dogecoin (DOGE) rose 15%, and Chainlink (LINK) increased 19%. However, whether this is a temporary recovery or the beginning of a new "risk-on" cycle remains to be confirmed with time.
