The Game Is Changing

Feb 16, 2024 • 9 Min Read

Breaking Away

While we maintain that macro conditions are still the most critical factor in assessing the medium/long-term trajectory of BTC prices, daily returns of the leading cryptoasset continue to exhibit a lack of defined correlation with any major macro asset.

To us, the biggest reason for this sustained lack of correlation is the advent of the spot BTC ETF. A prime example of how ETFs are influencing BTC's performance during US market hours occurred on Tuesday. We observed a significant divergence in the response of BTC versus gold following a hotter-than-expected CPI number.

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The dynamic between BTC and QQQ was similar, albeit less pronounced. It's worth noting that traditionally, BTC reacts with higher sensitivity to rates and changes in conditions for risk assets. Thus, observing equities drawdown over 1% while BTC barely flinches should capture investors' attention.

The video in this report is only accessible to members

As mentioned above, the major reason for this divergence in performance is the advent of spot BTC ETFs. They led to an accumulation of flows leading up to the big launch, despite rising rates and a strong dollar.

Actual flows are now reducing the downward sensitivity of BTC to any tightening in financial conditions. The sample size is small, but the effects are real and serve as a gr...

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