The growing merging of cryptocurrencies and traditional markets: Is Bitcoin’s independence in danger?
Portnoy’s Concerns About Bitcoin Correlation
Dave Portnoy has noted on Platform X that Bitcoin no longer appears to be operating independently of the US stock market. He noted a striking pattern: Bitcoin’s price movements often mirror those of the stock market. This raises the question of whether Bitcoin can still be considered an asset operating outside of traditional financial systems, as its price behavior increasingly aligns with other risk assets.
Market Turmoil and Bitcoin
In the context of market developments, an example from the week in which Trump‘s “Liberation Day” tariffs were announced illustrates the correlation between Bitcoin and the broader market. During this period, stock prices in Asia, Europe, and the US fell sharply, and Bitcoin also experienced a significant decline of up to 4.5%, resulting in a price of approximately $81,770. Other cryptocurrencies such as Ethereum and XRP also suffered similar losses.
Responses from Industry Leaders
Michael Saylor, Executive Chairman of Strategy, responded to the observations, explaining that Bitcoin’s short-term price movements are largely due to its liquidity. In crisis situations, traders often sell what they can rather than what they want. Because Bitcoin is considered the most liquid digital asset around the clock, price-sensitive movements occur during market stress, but this does not necessarily indicate a long-term correlation with the stock market.
Sven Henrich, a financial strategist, highlighted the high correlation between Bitcoin and the stock markets, currently over 90%. He pointed out that this volatility is caused not only by market speculation but also by liquidity-related vulnerability, especially in times of heightened uncertainty.
A Slow Road to Independence
Although Bitcoin’s price movements are closely correlated with traditional markets, Barstool Sports’ Jack Mac believes it’s still early to claim that Bitcoin will always react this way. The involvement of large institutional investors could lead to continued selling of Bitcoin during periods of economic uncertainty, strengthening its correlation with the general market.
At the same time, analyst Brett notes that Bitcoin’s true value lies not only in its potential as a “store of value” but also in its technological innovation. For countries experiencing economic instability, Bitcoin has proven itself as a hedge against falling national currencies. Nevertheless, as long as institutional players remain an integral part of the market, Bitcoin’s price could continue to mirror stock market fluctuations.
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