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It’s been more than a year since the U.S. Securities and Exchange Commission (SEC) legalized Bitcoin spot ETFs. At that point, one thing became quite obvious: "digital gold" might not be the best description.
Stock markets are having a strong year in 2024, with the S&P 500 Index (^GSPC) up nearly 25%. Meanwhile, Bitcoin (BTC-USD) is up around 130%.
While the absolute returns are obviously very different, both markets are moving in the same direction, with Bitcoin rising when investors are willing to take risks and appear to give up on their desire for a stable, uncorrelated digital store of value.
Since the election, these trends have only become more pronounced amid the unusual synchrony between the world’s largest stock index and its top cryptocurrency.
As of 7:42:00 PM UTC. The market is open.
A month after the election, the S&P 500 soared 6.5% and Bitcoin rose 50%, breaking $100,000 for the first time as the Trump administration became business-friendly.
Since then, sentiment has softened for both stocks and Bitcoin, with the S&P 500 falling below 5,900 points and Bitcoin falling back below the six-digit milestone.
As of 2:45:12 p.m. ET. The market is open.
However, to be clear, amidst the huge gains, the retracements were barely noticeable. The rewards are already clear for cryptocurrency investors, who have developed a friendly listening relationship with Trump and digital asset enthusiasts and venture capitalists who have poured tens of millions of dollars into his campaign.
Incoming SEC Chairman Paul Atkins is seen as crypto-friendly. Reports that Trump may sign an executive order on day one, delivering an immediate victory to cryptocurrency enthusiasts, suggest those investments are paying off. Bitcoin may be down 10% since mid-December, but it is up 40% since Election Day.
The launch of the Bitcoin ETF a year ago made the cryptocurrency part of the mainstream conversation among investors allocating funds. A year later, the industry has become a mainstream player in presidential politics.
If the $107 billion Bitcoin spot ETF offers one useful lesson, it's that making Bitcoin easier to own could be a tailwind — something investors have apparently been considering since Election Day.
But even as Bitcoin earns a spot in investors' diversified portfolios with these ETFs, its role seems clear: as a risk asset that tends to move up and down with the stock market.
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