Bitcoin extends rebound with year-to-date gain at 50%; defies macro peril

business-standard.com:

Concerns about further interest-rate hikes, a fizzling stock rally and a US crypto crackdown all suggest Bitcoin and other tokens should be beating a hasty retreat. Instead, they’re extending their 2023 rebound.

Bitcoin’s year-to-date gain has now reached 50% after a further jump in February, contrasting with a retreat in global equities this month courtesy of a macroeconomic environment replete with growth and inflation concerns.

This divergence has dented a positive correlation between shares and crypto that sprouted in the pandemic. A 40-day correlation between Bitcoin and the S&P 500 has slid below 0.3 to the lowest since 2021 from a May record above 0.8. A reading of 1 implies assets are fluctuating in lockstep and minus 1 signifies the opposite.

Other relationships have shifted too: A once deeply negative 40-day correlation between Bitcoin and a dollar gauge is rapidly disappearing, while January’s tight tie between Treasuries and the largest digital asset has dissipated.

“Crypto has been decoupling from traditional assets in 2023” and “crypto-specific events increasingly drive the market,” digital-asset research company Kaiko wrote in a note.

An array of assets including digital tokens surged in January, but the risk rally outside of crypto snapped this month as data including strong US jobs figures dashed hopes for an imminent peak in borrowing costs.

Crypto is outpacing traditional assets as a result. The S&P 500 has returned a smidgen over 6% this year, the Nasdaq 100 almost 13% and gold about 1%. The MVIS CryptoCompare Digital Assets 100 Index of leading tokens is up 40%.

Some commentators contend that endogenous drivers in the digital-asset industry are influencing speculative bets on tokens. Hong Kong,