The divergence is tied to the declining strength of the US dollar. Since January, the dollar has dropped over 10% against the pound and continues to fall against the euro.
This weakening trend has become a focal point for market participants who view it as a broader signal of economic instability and a catalyst for what some are calling a new phase of “bitcoinization.”
According to the firm, Bitcoin is in uncharted territory as the US rates are climbing, the dollar has fallen by 11% in just six months, and over $1 trillion has been added to crypto’s total market cap in the past three months.
Since the latter, Bitcoin has added more than $15,000 to its price, reinforcing the inverse correlation with the US Dollar Index.
Moreover, as Bitcoin rallies, traditional assets are beginning to lag. The S&P 500, when measured in Bitcoin, is down 15% year-to-date and has declined nearly 99.98% since 2012.
Jamie Coutts, the chief crypto analyst at Real Vision, echoed this sentiment, pointing out that Bitcoin’s 40% rally since April aligns with a breakout in global liquidity after a three-year downtrend.
According to Coutts, every 1% rise in global liquidity could translate into a 20%+ increase in Bitcoin’s price, a dynamic highlighting the scale of capital rotation into crypto.
“While this simple model accounts for the continuation of the hoovering of capital from all corners of the globe into Bitcoin, it doesn’t account for the inevitable ‘oh sh#t’ moment of panic buying that is going to happen…eventually. It will be best of times, it will be the worse of times.”
