In a week marked by significant financial milestones, Bitcoin surged over 13%, marking its most substantial weekly gain since October. This surge coincided with the S&P 500 breaking the historic 5,000 mark, driven by a surge in artificial intelligence-related stocks.
Bitcoin, the leading cryptocurrency, experienced a notable 13.5% rise to reach $48,300 in the seven days leading up to February 12, according to data from CoinDesk. The CoinDesk 20 Index, measuring the performance of major cryptocurrencies, also saw an 11% increase during the same period.
The surge in Bitcoin occurred amidst continued inflows into U.S.-based spot Bitcoin exchange-traded funds (ETFs), with spot ETFs accumulating over $400 million in inflows on Thursday alone, marking the highest daily inflow in nearly a month. These inflows overshadowed reports of bankrupt crypto lender Genesis seeking approval to liquidate its $1.6 billion Bitcoin holdings.
Simultaneously, the S&P 500, a key equity index on Wall Street, experienced its fifth consecutive week of gains, closing above the historic $5,000 mark for the first time. This surge in the S&P 500 was primarily driven by the booming performance of artificial intelligence-related stocks.
Greg Magadini, Director of Derivatives at Amberdata, noted that the rise in AI-related stocks has fueled bullish momentum across the broader market, benefiting both traditional equities and the cryptocurrency market. Magadini highlighted the synergies between AI technology and cryptocurrencies, suggesting that investor appetite for tech stocks is positively influencing the crypto market and vice versa.
However, some market observers caution that stocks may be becoming overvalued, with the S&P 500 equity risk premium dropping to its lowest level since at least 2003. The equity risk premium compares projected annual corporate earnings growth with the yield on the 10-year U.S. Treasury note to assess the relative attractiveness of stocks. This decline suggests that stocks are expensive compared to Treasury notes, indicating strong risk-on sentiment in the market.
As Bitcoin records its biggest weekly gain in months and the S&P 500 reaches unprecedented levels, investors are closely monitoring market dynamics and the evolving relationship between traditional equities and cryptocurrencies.
