- Bitcoin’s correlation with global equities has turned negative for the first time, amid Trump’s shifting views on cryptocurrencies.
- Trump’s influence is boosting bitcoin with his pro-crypto agenda, as he leads in betting markets for the upcoming November election.
OUR TAKE
The recent divergence between bitcoin and global equities has been striking, largely influenced by Donald Trump’s shifting stance on cryptocurrencies. As the 2024 presidential election approaches, Trump’s adoption of a pro-crypto position has seemingly decoupled Bitcoin’s performance from traditional equity markets, with the cryptocurrency up around 11% over the past month. This is in stark contrast to the modest gains in global equities, which are facing uncertainty from mixed earnings results. Personally, I find this divergence fascinating, as it highlights the growing influence of political figures on digital asset markets. It’s interesting to note that bitco is increasingly seen as a barometer of Trump’s election success, which suggests that political dynamics have become increasingly linked to market movements.
—Heidi Luo, BTW reporter
What happened
Bitcoin and global equities are now moving in opposite directions, a shift highlighted by recent analysis showing the correlation coefficient between bitcoin and global equities falling to -0.20. This significant divergence is largely attributed to Donald Trump’s evolving approach to cryptocurrencies as he ramps up his election campaign. Previously a critic of crypto, Trump has adopted a more crypto-friendly stance, which has had a positive impact on Bitcoin’s market performance.
Against this backdrop, bitcoin has rallied sharply, gaining around 11% over the past month, in contrast to the modest gains in global equities. This shift comes as Trump gains momentum in the polls, bolstered by his recent performance and positions.
“Bitcoin is now a proxy for a Trump win,” said Sean McNulty, director of trading at Arbelos Markets. “For stocks, there are no such clear winners and losers from a Trump trade.”
Also read: Trump to speak at Bitcoin 2024 in Nashville on July 27
Also read: Trump pitches himself as ‘Crypto President’ at tech fundraiser
Why it’s important
Further complicating the landscape, Vice President Kamala Harris, who is likely to be Trump’s main challenger, has yet to clarify her position on cryptocurrencies. This adds to the uncertainty as market participants consider the regulatory implications of the upcoming presidential election. Trump’s upcoming speech at a bitcoin conference is eagerly awaited, as it could provide further clarity on his regulatory stance towards cryptocurrencies.
More broadly, global equities are under pressure, reacting not only to earnings but also to the broader economic implications of a potential change in US leadership. Investors are watching closely for signs that this year’s AI and tech-driven rally has more room to run. In this context, the cryptocurrency’s increasing decoupling from traditional financial assets is underscored by bitcoin’s significant gains throughout 2024, up around 51%.
This period of political and economic change highlights Bitcoin’s emerging role not only as an investment, but also as a proxy for political sentiment and potential shifts in the regulatory landscape. As bitcoin and global equities chart their separate courses, the intersection of finance and politics is becoming increasingly important in shaping market dynamics, with implications that could extend far beyond the immediate future of trading screens.
