- Banking collapse and the tumultuous events of the past week have resulted in a divergence between Bitcoin’s price action and equities.
- Analysts identified Bitcoin’s divergence and assessed whether the asset would start trading as a flight to safety.
- Bitcoin price enjoyed a bullish streak before correcting to the $25,100 level.
Bitcoin’s safe haven narrative lost its relevance in the last bear market, in 2022. The recent divergence between the largest cryptocurrency by market capitalization and US equities. Analysts believe BTC has started trading as a flight of safety for market participants.
Also read: Former President of FTX.US believes bank meltdowns can reshape crypto for traders
Will Bitcoin make a comeback as a safe haven?
While US financial regulators crackdown on cryptocurrency firms and institutions, and crypto-friendly banks collapse, market participants look back at a simpler time when Bitcoin acted as a “safe haven,” a hedge against inflation.
The bear market of 2022 and Bitcoin’s increasing correlation with US equities and tech stocks negated the narrative of a safe haven. After the asset’s recent bullish streak and BTC price hitting a nine month high of $26,000, the narrative is back in play.
Analysts behind the Twitter handle @filbfilb shared the following asset correlation chart in a recent tweet, noting quite a divergence between Bitcoin's price action and that of equities, whereas not the case with Gold, which seems to also have caught a bid.
Correlation between Bitcoin, S&P 500 and Gold
As seen in the chart above, the largest asset by market capitalization has decoupled from the S&P 500 around March 13. As of this week, Bitcoin offers traders respite from corrections in US equities and the “safe haven” narrative is back in play.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Why crypto may see a recovery right before or shortly after Bitcoin halving
Cryptocurrency market is bleeding, with Bitcoin price leading altcoins south in a broader market crash. The elevated risk levels have bulls sitting on their hands, but analysts from Santiment say this bleed may only be cauterized right before or shortly after the halving.
Manta Network price braces for volatility as $44 million worth of MANTA is due to flood markets
Manta Network (MANTA) price was not spared from the broader market crash instigated by a weakness in the Bitcoin (BTC) market. While analysts call a bottoming out in the BTC price, the Web3 modular ecosystem token could suffer further impact.
Bitcoin price uptrend to continue post-halving, Bernstein report says as traders remain in disarray
Bitcoin is dropping amid elevated risk levels in the market. It comes as traders count hours to the much-anticipated halving event. Amid the market lull, experts say we may not see a rally until after the halving.
OMNI post nearly 50% loss after airdrop and exchange listing
Omni network (OMNI) lost nearly 50% of its value on Wednesday after investors dumped the token following its listing on top crypto exchanges. A potential reason for the crash may be due to the wider crypto market slump.
Bitcoin: BTC’s rangebound movement leaves traders confused
Bitcoin (BTC) price has been hovering around the $70,000 psychological level for a few weeks, resulting in a rangebound movement. This development could lead to a massive liquidation on either side before a directional move is established.