If you’re a crypto investor, you’ve probably heard how Bitcoin has shown hints of tracking the S&P500, Nasdaq, or even tech stocks. However, this remains a point of contention in the industry.
Is there a conscious decoupling?
Messari Insights suggested in a recap for the week ending 3 March that Bitcoin’s green candle on 22 February indicated that Bitcoin has broken its ties to the S&P500 index. According to Messari Insights,
“On February 22nd bitcoin seemingly uncoupled from the S&P 500, hinting at the possibility that the Russia–Ukraine conflict has driven demand for the digital gold alternative and subsequently prompted an industry-wide rally.”
This is certain to ignite discussion and debate in the crypto community, as more analysts have warned investors about the ramifications of Bitcoin becoming insufficiently varied to hedge against risks like as inflation and global crises.
Indeed, in light of Bitcoin’s decline below the $40,000 barrier, Santiment data indicated that the S&P500 fell as well.
📉 As the week comes to a close, #Bitcoin has fallen back to $38.9k, while the #SP500 followed suit. Their correlation remains relevant to when $BTC will be able to break out again. Meanwhile, #gold climbed back to the same level as when #war news broke. https://t.co/soFXrWy0Yb pic.twitter.com/lFMn1kFYBg
— Santiment (@santimentfeed) March 4, 2022
Bitcoin’s tall green candle on 28 February further fueled optimism that if it broke through the $40,000 resistance, it will successfully break beyond the $45,000 barrier. This would clear the way for it to test the newly established resistance level of $47,000. At press time, Bitcoin was trading at $39,071.22, down 5.73 percent in the previous 24 hours.
When it comes to investors’ feelings, we can see that weighted santiment increased somewhat following the gain on 28 February, but subsequently fell to roughly -1.5 as Bitcoin failed to maintain a price above $40,000.
Additionally, the king coin’s decline impacted a sizable portion of the crypto market, since the majority of the top 50 coins were in the red at press time.
Gold stated, “Do not be afraid.”
As businesses throughout the world restrict access to millions of Russian users, people are turning to the time-tested safe-haven asset: gold. Santiment stated that gold prices have returned to the levels seen during Russia’s initial invasion of Ukraine. Thus, anxiety and insecurity are never far away.
What’s more intriguing is that gold holds a specific place in the Russian market. According to a report by Arcane Research,
“Since 2008, Russia has accumulated gold heavily, increasing its gold reserves from 450 tonnes to 2,200 tonnes. As more sanctions reach Russia, the long-term implications for gold could be interesting to follow, with a potential scenario being Russia seeking to use gold for barter.”
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.