In recent months, the performance of the S&P 500 has been eye-catching. Technology stocks have been soaring, pushing the index to new highs. Especially on Tuesday, with the help of a wave of strong AI and big technology company earnings reports, the S&P 500 index soared to 5796.80 points, setting a new record. The market was full of optimism, and investors' joy almost overflowed the screen.
However, in stark contrast to the carnival of the stock market is the sluggish performance of Bitcoin. As the "king" of the crypto world, Bitcoin's performance seems weak. The price fluctuates between $50,000 and $65,000, far away from the peak of the bull market.
Especially after the CPI data released by the Federal Reserve last night, Bitcoin fluctuated sharply. Data showed that the annual rate of the US unadjusted CPI in September was 2.4%, which was the sixth consecutive month of decline and hit a new low since February 2021. After the release of this data, the S&P 500 fell slightly during the session and then quickly rose in the late trading, and the index was almost unmoved. However, the price of Bitcoin once fell below $59,000.
The macro market liquidity is still abundant, the economic data is also bright, and the confidence of investors has been boosted, but the price of Bitcoin has not recovered synchronously. You know, once upon a time, Bitcoin and the S&P 500 were almost "Siamese twins" that resonated with the same frequency, and the rise and fall seemed to be scheduled. But now, the S&P 500 is far ahead, but Bitcoin is standing still and falling into a wide range of fluctuations. Why doesn't Bitcoin rise with the US stock market?
AI and technology stocks take the spotlight: a chill in the crypto world
In 2023 and 2024, AI has become the "new darling" of the capital market. Generative AI has become popular, and technology giants have continuously launched new AI technologies, products, and applications. The market's expectations for future technology have reached their maximum, and funds have poured into the technology track. Under such circumstances, the S&P 500 has once again ushered in an upward trend, setting new highs.
On the Bitcoin side, although there are technological developments such as Layer 2 and Lightning Network, it is far less attractive than the AI track in attracting market attention. Investors are more willing to bet on technology companies that can bring faster commercial returns, rather than Bitcoin, which is relatively mature but lacks explosive growth opportunities.
Bitcoin’s dominance rises
The rise in Bitcoin's dominance may seem to be good for Bitcoin, but it actually limits the diversified development of the entire cryptocurrency market. In the crypto world where many players once emerged, only Bitcoin is now the only "giant" leading the way, and the fate of other altcoins has been greatly weakened. The decline in liquidity has made the market prospects of altcoins even bleaker, and the strength of Bitcoin alone is unlikely to drive the entire market out of the trough.
The price of Bitcoin fluctuates violently whenever there is a slight disturbance in the market. This volatility is exactly contrary to the steady rise of the S&P 500. As a result, we can see that the performance of Bitcoin and the S&P 500 in market fluctuations is becoming increasingly inconsistent.
Will Bitcoin and the S&P 500 move together again in the future?
The financial market is like a chess game that never ends. The rules of the past may not apply to the future. The changes in the correlation between Bitcoin and the S&P 500 reflect the changes in capital flows, the evolution of the regulatory environment, and the shift in market preferences. Behind the carnival of the S&P 500, it is the technology giants in the AI wave that are leading the trend; while Bitcoin is facing the loneliness of moving forward alone after ushering in the dawn of ETFs.
In the future, Bitcoin may once again be seen as a safe haven for "digital gold" and a haven for capital in a turbulent world; or it may continue to oscillate between high volatility and regulatory challenges. Whether it can once again move forward side by side with the traditional market or continue to take an independent path depends on the attitude of capital, the pace of innovation, and every decision we make in the ever-changing market.
