Bitcoin proved resilient to the latest instability in traditional markets, as the No. 1 cryptocurrency by market capitalization rose above $58,000 briefly Monday, well above last week’s low around $50,000.
The divergence offers a reminder of how bitcoin, which traded lightly in sync with the Standard & Poor’s 500 Index of U.S. stocks for most of last year, is now more or less back to doing its own thing: The 90-day correlation between the two has dropped to zero.
Some U.S. stocks went through an unprecedented sell-off on Friday after the forced liquidation of more than $20 billion in holdings linked to Bill Hwang’s family office, Archegos Capital Management. On Monday, stocks were mixed as traders weighed the potential fallout on Wall Street.
“We are still getting reports of continual liquidation by prime brokers on the Street,” Annabelle Huang, partner at Hong Kong-based market maker Amber Group, said. “But from a crypto-centric perspective, we observed 208.8K BTC ($11.05 billion worth) was withdrawn from Coinbase in the past four months, which is a bullish sign for bitcoin and the crypto market.”
The stock market in general has struggled in the recent weeks. The Nasdaq Composite is down 7% from a intraday record on Feb. 16.
Bitcoin, still considered an alternative asset and a risky one by many investors, traveled lower with the stock market, down by 18.0% to $50,458.10 on Thursday from its all-time high at $61,556.59 on March 13.
Yet, the quick recovery to near $58,000 demonstrates stronger confidence from investors in the oldest and largest cryptocurrency. The next level of price resistance is seen at around $60,000.
“Exchange outflows have increased this week, indicating market participants are moving crypto assets into cold storage or private custody,” the digital-asset data firm TradeBlock wrote in its weekly newsletter on Monday. “Private-wallet custody typically indicates a pattern of longer-term holding.” TradeBlock is owned by CoinDesk.
Moreover, bitcoin received another price boost from Visa after the payment giant announced its support for USDC, the second-biggest stablecoin pegged to the U.S. dollar.
There’s no direct link in the deal to bitcoin, but the announcement was seen by traders as a fresh sign of growing institutional and mainstream adoption of cryptocurrencies.