- 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
Mastercard to settle stablecoin transactions in Asia-Pacific region with Australian platform
Stablecoins have long been considered the safer option for bringing crypto to the world. However, the recent few instances of stablecoin collapses have raised concerns regarding the same as well. Even so, Mastercard is attempting to widen its reach in the Asia-Pacific (APAC) region.
How IMX could respond to Immutable's new partnership with Polygon Labs as gaming tokens trend this week
Immutable X and Polygon Labs have partnered for Web3 game development acceleration. The partnership comes ahead of launching a zkEVM-powered platform for studios and developers and a day into the GDC. The news could fuel a 43% upswing for IMX as the hype around gaming tokens continues.
Bitcoin price nears $30,000 despite banking crisis; First Republic Bank crashes by 47% in a day
Bitcoin price has managed to pull itself away from the narrative of being correlated to the United States stock market and macroeconomic conditions. The biggest cryptocurrency in the world has been rallying for more than a week now despite the ongoing banking crisis in the country, which is close to bringing down another bank.
MANA eyes 21% gains thanks to the world’s largest event for the art and science of game making
Decentraland price is on a 10-day uptrend as it moves diagonally along an ascending trendline. MANA could ascend 21.68% from the current price to tag the $0.7330 resistance level last tested on February 21. The bullish thesis could be invalidated if the gaming token drops below the uptrend line at $0.6015.
Weekly Recap: Bank runs, stablecoin drama, Voyager bankruptcy hearing, threat to DOX Shiba Inu founder
US bank runs sent shockwaves through market participants, traders turned to Bitcoin and the “safe haven” narrative made a comeback. Binance’s $1 billion acquisition of bankrupt crypto lender Voyager is back on track with a ruling from a New York bankruptcy judge.