Bitcoin and U.S. Equities: A Comedy of Errors and Fading Correlations

by

What to know:

  • Gold, that shiny rock everyone seems to love, has set 12 consecutive daily all-time highs. Apparently, it’s in high demand, even as U.S. equities are having a bit of a sulk. 🥇
  • This precious metal is now strutting its stuff independently of U.S. equities, suggesting investors might be looking for a cozy blanket of defensive assets. 🛡️
  • Fed Chair Powell, in a moment of clarity, dismissed the notion of a “Fed put,” which is a fancy way of saying, “Don’t count on us to save your bacon during market meltdowns.” 🥓

On Wednesday, the price tango between bitcoin (BTC) and U.S. equities caught the eye of investors, revealing early signs that their once close relationship might be fading faster than a magician’s rabbit. 🎩🐇

In a well-balanced portfolio, one would expect assets to behave like distant relatives at a family reunion—polite but not too close. Gold, for instance, has been on a record-setting spree, hitting 12 new daily highs this year, clearly showing it’s not interested in mingling with U.S. equities. 🏆

Bitcoin, often dubbed a leveraged play on the Nasdaq 100, seems to be reconsidering its life choices, as recent trends suggest that this relationship may be weakening like an old rubber band. 🥴

Take BlackRock’s iShares Bitcoin Trust (IBIT), which only trades during regular U.S. market hours—because who needs sleep, right? On Wednesday, it closed up 0.46%, while the Nasdaq 100 took a nosedive of more than 3%, plummeting as much as 4.5% at one point. Talk about a dramatic fall! 🎢

Meanwhile, Strategy (MSTR), a bitcoin-levered play included in the Invesco QQQ Trust (QQQ), managed to finish the day up 0.30%, even as all the Magnificent Seven tech stocks decided to take a dip in the red sea. 🦸‍♂️

Throughout the day, the correlation between bitcoin and the Nasdaq fluctuated like a cat on a hot tin roof. For instance, while Fed Chair Jerome Powell was speaking, both assets decided to drop together, as if they were in a synchronized swimming routine. However, bitcoin later bounced back above $84,000, while the Nasdaq continued to hit new intraday lows, proving that sometimes, one asset just wants to party alone. 🎉

Powell’s comments were more hawkish than a flock of birds at dawn, citing inflation concerns driven by tariff uncertainties and increases, which he labeled as an “evolving risk.” Short-term inflation expectations have also decided to join the party and move higher. 📈

Is there a Fed put for the stock market? His reply? “I’m going to say no.” Ouch! That’s like telling a kid there’s no Santa Claus. 🎅

The “Fed put” is a long-held market theory suggesting the Fed will swoop in like a superhero to stabilize markets during sharp downturns—a safety net that bitcoin, as a bearer asset, inherently lacks. The open question now: Was Powell bluffing, or is the Fed truly stepping away from its role as the market’s safety net? Only time will tell, and it’s usually late to the party. ⏳

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2025-04-17 11:34