Have Bitcoin & Crypto Become a Macro Asset?
Crypto is showing an increasingly stronger sensitivity to interest rates and rate-sensitive assets
By Macro, I mean is it being impacted by the global macroeconomics and other macro factors like interest rates and central banking policy. Note this is a developing theory and I am all ears for other thoughts.
The origination of this thought is the strong correlation between bitcoin and 30 year interest rates from April 2020 to April 2021. Both went up in tandem as the reflation trade took hold over the past year.
Same with total cryptocurrency market cap vs 30 year rates
And even look at the comparison over the summer. Bitcoin crashed hard in mid May 2021 right as the 30 year rate started slipping back down.
Even comparing 10 year rates to bitcoin over the past 2 months, we see bitcoin bottomed 2 weeks prior to 10 year rates
And others in the finance community are starting to see it too. After a recent Jackson Hole meeting for the Federal Reserve, Bitcoin and Ethereum responded to the dovishness of Jerome Powell’s speech.
And we see this with XLF (S&P Financials ETF) vs bitcoin. Bitcoin leading the top and bottom for XLF by a few days to weeks.
Even from bitcoin’s price in 2011 to today, it seems it is slowly becoming more correlated to rate sensitive assets. XLF vs Bitcoin since 2012
This is likely a sign of maturity for the asset class. Furthermore, bitcoin and crypto are showing themselves as the leading indicator of trends and speculation in the macro environment.
Any other data points to consider with this idea of Bitcoin and crypto becoming more macro and mainstream? I am all ears.
Authored by Derman Capital (Twitter)