Yesterday was a painful day for both cryptocurrency and stock investors as the prices tumbled in a similar manner.
As CryptoPotato reported, the Dow Jones, S&P 500, and Nasdaq 100 lost sizeable chunks of their value of around 5%, and so did Bitcoin. This invalidated the narrative for the decoupling of crypto from traditional stock markets.
There was one asset, however, that remained stable and seemingly unfazed by the market crash. Gold remained stable, completely uncorrelated with both Bitcoin and stocks.
A Mild But Indecisive Recovery
Yesterday’s market crash was followed by a mild recovery that seems rather unconvincing. The major indices are charting increases of around 2% at the time of this writing, while Bitcoin is trading below $9,500 for a 2.2% drop over the past 24 hours.
If one thing became clear, however, it’s that stocks and Bitcoin are more or less paired at the moment.
As seen in the above chart, global equity markets and BTC tumbled at almost the exact same time. Their reaction after the drop has also been relatively similar – mild yet indecisive recovery.
Gold, however, stands apart. Not only has it bee particularly uncorrelated with stocks and Bitcoin as of late, but it’s also proving why it’s regarded as the best hedging instrument. Gold price remains stable as it trades at around $1740 per ounce.
Popular analyst Mati Greenspan argued that this is a clear sign of Bitcoin’s institutionalization. And he might be right.
A couple of days ago, when the US Federal Reserve concluded its two-day June meeting and confirmed near-zero rates for the short- and possibly mid-term, Bitcoin shot up to $10,000 before getting rejected and plunging lower.
Fidelity recently reported that 36% of institutional investors own Bitcoin or another cryptocurrency. Hence, it’s not the strangest thing to see BTC coupled with assets, the price of which is mainly dictated by institutional investors.