The past year has seen significant changes in the cryptocurrency market since the SEC legalized bitcoin spot ETFs. A key takeaway is that “digital gold” may not be a suitable description. In 2024, the stock market saw a substantial 25% rise, while bitcoin rose around 130%. Both markets have been driven by similar sentiments, with investors taking risks and abandoning stable store of value aspirations.
Since the election, these trends have intensified, mirroring an unusual synchronization between the S&P 500 and bitcoin. The month after the election, the S&P 500 surged 6.5%, and bitcoin rose 50%, reaching $100,000 for the first time. However, the mood has since moderated, with the S&P 500 falling below 5,900 and bitcoin losing its six-figure milestone.
Despite this moderation, investors have seen significant gains from their crypto investments, including a friendly ear from Trump’s administration. The incoming SEC chair Paul Atkins is viewed as crypto-friendly, and reports suggest that Trump may sign an executive order to deliver a win for crypto enthusiasts. Bitcoin has dropped 10% since mid-December but still remains up 40% since Election Day.
The launch of bitcoin ETFs last year has made cryptocurrencies a part of mainstream investors’ conversations. A $107 billion market indicates that making it easier to own bitcoin can be beneficial, but its role in investors’ portfolios seems clear: as a risk asset that often mirrors the stock market’s performance.
Source: https://finance.yahoo.com/news/bitcoin-and-stocks-have-been-moving-in-sync-morning-brief-110025869.html