Glassnode says Bitcoin needs recovery against indices to break current market cycle

Bitcoin is steeply lagging behind equities, and until it begins to regain strength, the current market will remain dominated by stocks, according to Glassnode.

Over the past 90 days, Bitcoin has dropped by 20%, four times as much as the S&P 500, which rose by 5% in the same period. 

Looking further back, the crypto market has performed the worst among major asset classes so far this year.

Bitcoin is down 35%, and altcoins are down 57% since January.

In contrast, gold is up 60%, copper 66%, and silver 107%. Nasdaq and Russell 2000 see a 38% and 31%, respectively, making crypto the weakest in the list over that period.

Markets remain “equity-led tape” except Bitcoin moves, says Glassnode

Glassnode said this pattern continued over the past week.

“The last 7 days show the same pattern,” Glassnode wrote. “Until Bitcoin reclaims strength against the indices, this remains an equity-led tape.”

Glassnode’s statement is evident in the Bitcoin market performance in July.

Artificial intelligence and semiconductor stocks suffered a steep market correction in July, with chip ETFs plunging over 20%. The Nasdaq-100 also fell nearly 7%.

However, Bitcoin and Ethereum gained 9% and 20%, respectively, in the same month, diverging from the rest of the stock market.

This is a big change from their previous close connection. In May, Bitcoin’s 90-day correlation with the Nasdaq was 0.89, according to TradingView data. By July 28, K33 Research found the 30-day correlation had dropped to 0.43.

BlackRock says the decoupling is “healthy”

Robert Mitchnick, who leads digital assets at BlackRock, said Monday that Bitcoin decoupling from stocks is “healthy” for investors who see Bitcoin as a way to diversify, calling July results a turning point for the crypto market.

Mitchnick also noted that crypto sentiment has begun to improve in the past month, with inflows returning to ETFs.

As of August 7, BlackRock’s iShares Bitcoin Trust (IBIT) had $48.51 billion in net assets, according to SoSoValue, and brought in $693.64 million in August.

“We have seen sentiment turn in a noticeable but subtle way the last month or so,” Mitchnick said.

US spot Bitcoin ETFs brought in $853.5 million in the week ending August 7, their best week since mid-April. IBIT made up about $693 million of that total.