Since the market opened yesterday, the S&P500 has lost 1.8%, the tech-heavy Nasdaq-100 is down 3.0% and tech darling Nvidia (NVDA) has bled 5.3%. Normally, bitcoin follows stocks (especially tech stocks) on their daily moves, but this time, as of writing, bitcoin (BTC) is up 0.5%. What gives?
It’s a small window of time, sure, but in a week where we are seeing Mt. Gox-related selling pressure and underwhelming spot ether ETF inflows, it’s surprising how well bitcoin has held today, considering especially how it usually moves.
Market commentators have long pointed out that Bitcoin is just a tech stock given its strong correlation to them. Bitcoin optimists, myself included, have been preaching about the impending decoupling when bitcoin sheds all asset correlations and becomes an uncorrelated macro asset that belongs in every balanced portfolio. But it hasn’t always seemed that way.
Narrative drives the day-to-day market moves, so what narrative does Bitcoin have that the stock market doesn’t have right now?
Donald Trump is not speaking at the biggest Stock Market Conference this week; mainstream investors aren’t eagerly awaiting what the former U.S. President might say on Nvidia; there are no rumors that a Nasdaq-100 strategic reserve will be announced.
But Trump is speaking at the Bitcoin Conference this week; bitcoin supporters are eagerly awaiting what the former U.S. President might say in a Saturday speech there; there are rumors that he’ll announce a Bitcoin strategic reserve.
It appears that, absent any other strong narratives, Trump is insulating bitcoin from the price action of tech stocks. Trump may be making a bid for the U.S. presidency and perhaps he deserves a new title: bitcoin’s decoupler-in-chief.
Whatever happens Saturday, Trump’s speech is shaping up to potentially be a “sell the event” event, as some market analysts have predicted. Trump could say or claim any number of things about bitcoin during his speech; who knows what. What’s for sure, though, is that his words will have wide sweeping effects on the crypto market.
It is interesting to see how the narrative surrounding Bitcoin can have such a significant impact on its price movements. The fact that Donald Trump, a prominent figure, is scheduled to speak at the Bitcoin Conference has created a sense of anticipation and speculation within the crypto community. This highlights the interconnectedness of external events and narratives with the cryptocurrency market, showcasing the importance of staying informed and aware of such developments.
As investors and traders navigate through the evolving landscape of digital assets, it is crucial to consider not only technical indicators but also the broader context and external factors that can influence market sentiment and behavior. The upcoming speech by Donald Trump serves as a reminder of the dynamic nature of the cryptocurrency market and the potential impact of influential figures on asset prices.