What to Know:

• A discrepancy between Bitcoin and the S&P 500 began after Donald Trump's election, yet both asset classes are now showing stronger alignment.
• Macro factors, such as interest rates, have impacted stock performance recently, while positive political scenarios and lower exchange reserves have supported Bitcoin, according to analysts.
• The recent increased correlation could pose short-term risks for Bitcoin.

Analysis Insight

Since Trump’s election on November 5, Bitcoin's value has surged approximately 47%, vastly surpassing the S&P 500's modest 4% growth. The new president's positive stance on cryptocurrency, coupled with Republican control of Congress, may influence crypto-regulatory dynamics.

Andre Dragosch, the Head of Research at Bitwise in Europe, observed that the Fed's tightening rate policy has adversely affected the stock market. "The Fed revised its planned rate cuts for 2025 to just two, which was lower than previous estimates," Dragosch explained.

Despite a strong DXY index impacting risk assets, Bitcoin's exchange supply remains limited, which has contributed to its resilience.

As of recently, the correlation between Bitcoin and the S&P 500 has reached 0.88—indicating a significant tie between their movements. While there are ongoing factors favoring Bitcoin, macroeconomic challenges could introduce risks in the near future.