Bitcoin Decouples from Stocks as Bullish Sentiment Returns

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After moving north of the USD as the mark on Wednesday, the bitcoin (BTC) is once again getting investors excited. And this time, financial institutions seem to be more interested in the most popular cryptocurrency, even if stocks and other risk assets have suffered in price.

In the last 7 days, Bitcoin has been on a bull run that has increased its price by more than 30%. At the same time, the US stock market index S&P 500 has remained more or less flat since last week, having traded lower during the month of September, losing 4.8% During the month.

Diverging prices have led to renewed discussion about the relationship between Bitcoin and the stock market, with some observers and market participants now suggesting that the narrative around Bitcoin could change to focus again on its gold-like store of value properties.

Among them was MicroStrategy CEO and famous Bitcoin bull Michael Saylor, who said that BTC “is breaking out of other cryptos due to regulatory expectations, making it the clear choice for institutional investors looking for digital real estate as a store of value.”

Highlighting a similar narrative today was also a Bloomberg report, which said that decoupling stocks and Bitcoin “could revive one of the long-standing promises of cryptocurrencies [.] That they can serve as a hedge to protect investment portfolios, when stocks are sold out in times or turmoil.”

Further, the same report also pointed to a note on Wednesday from strategist Nikolaos Panigirtzoglou and others at Wall Street investment bank JPMorgan that said institutional investors could return to Bitcoin, with some perhaps betting that this is a better inflation hedge than gold.

The bullish tone from JPMorgan strategists came on the same day that Dawn Fitzpatrick, CEO of Soros Fund Management, the family office of billionaire George Soros, confirmed that the company “owns some [bit] coins.”

Meanwhile, data from the Chicago Mercantile Exchange (CME), the US-based exchange where regulated Bitcoin and Ethereum futures (ETH) are traded, once again showed that futures are trading at a premium to spot prices.

Given that the CME is the preferred place for financial institutions to speculate on the Bitcoin price, the premium indicates a high institutional demand for exposure to the number one cryptocurrency.

And while CME futures are trading at a premium, shares of another regulated Bitcoin investment product – the Grayscale Bitcoin Trust (GBTC) – were trading below their fair value.

Stocks are now trading at a 16% discount to spot Bitcoin prices, and “could get worse,” said Eric Balchunas, senior exchange traded fund (ETF) analyst for Bloomberg, suggesting that a possible approval of a Bitcoin futures-backed ETF in the US would be bad for GBTC.

Dan Morehead, CEO of crypto investment firm Pantera Capital, reminded readers of the old Wall Street adage “Buy the rumor, sell the fact” in a letter to investors yesterday.”

“DEFINITELY working in our space,” Morehead wrote, before further explaining:

“During 2017, the markets rallied with the mantra ‘If the CME lists Bitcoin futures, let’s go TO THE MOON!!!'” The markets have then recovered, trading 2,440% to the same day futures.

“That was the top,” he said. “One of those -83% bear markets started that day. This cycle was repeated recently, he claimed, as the “whole industry” reveled in Coinbase’s direct listing. The Bitcoin market rose 822% on the day of listing, BTC peaked at USD 64,863 on that day – and then began a -53% bear market, Morehead wrote.

“Will anyone please remember the day before the Bitcoin ETF officially launches? Maybe I want to take some chips off the table”concluded the CEO.

At 09:42 UTC, Bitcoin rose 7.4% Over the past 24 hours, trading at USD after retreating from its high of USD on Wednesday. Ethereum, meanwhile, was trading at USD 3,562, up 5.7% Over the same period.

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