Renowned economist Peter Schiff underlined Bitcoin’s BTC/USD decoupling from risky assets as the leading currency recorded a sharp decline while stocks surged.
What Happened: Schiff took to X on Thursday to comment on the sudden collapse of Bitcoin, which fell over 5% in a short period. The drop coincided with a stock market rally that saw the S&P 500 closing 1.61% higher at 5,543.22 and the tech-heavy Nasdaq Composite surging 2.34% to end at 17,594.50.
Schiff contrasted Bitcoin’s fall with that of gold, which recovered from a morning pullback to record gains. He noted that gold’s gains could have been higher had investors not misinterpreted the day’s data.
In reality, Bitcoin has become more correlated with stocks over the past month. Its 30-day Pearson correlation coefficient with the S&P 500 rose to 0.30, according to The Block, up from -0.81 during the same time last month.
Note that the correlation coefficient is used to determine how strong a connection is between two variables. A positive number indicates that both variables will move in the same direction, i.e., if stocks rise, Bitcoin will rise, and vice versa. A negative correlation suggests otherwise.
Similarly, King Crypto became more coupled to the Nasdaq Composite, with the coefficient between the two rising to 0.13, up from -0.83 a month ago.
Why It Matters: Schiff’s comments come amidst a turbulent period for Bitcoin. Just a week prior, he had dismissed Bitcoin as a possible reserve asset following an 18% weekly drop. He argued that a reserve asset should have characteristics like relatively low volatility, the capacity to be readily sold when needed, and a more stable value than assets it's supposed to hedge.
The remarks were in response to former President Donald Trump-led Republican Party’s poll plank to make Bitcoin a strategic reserve asset.
Schiff has been criticized for coming up with small timeframe windows to highlight Bitcoin's weaknesses and make conclusions about King Crypto’s potential.
On his part, Schiff maintains that he is open-minded about Bitcoin but has yet to hear a compelling argument that would change his stance.
Price Action: At the time of writing, Bitcoin was exchanging hands at $58,439.75, rising 0.75% in the last 24 hours, according to data from Benzinga Pro.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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