S&P 500 Surges 20% In Six Weeks As Bitcoin Lags

Equities have surged higher, with the S&P 500 index rising by more than 20% in a six-week market comeback, driven by a resurgence in investor confidence and optimism. This rally has been fueled by a combination of factors, including strong corporate earnings, positive economic data, and accommodative monetary policies. The market's upward trajectory has been particularly notable, as it has outpaced other asset classes, including Bitcoin.

Bitcoin, which has often been seen as a hedge against market volatility and a store of value, has lagged behind the equity market's gains. Despite predictions that Bitcoin could double if gold prices were to rally significantly, the cryptocurrency has not seen the same level of appreciation as equities. This divergence highlights a shift in investor sentiment, with a greater focus on traditional assets amid improving economic conditions.

The strong performance of equities has been reflected in the stock prices of individual companies. For instance, Bit Digital Inc.'s stocks have seen a significant increase, trading up by 13.59%. This surge in stock prices is indicative of the broader market trend, as investors have shown strong confidence in the equity market's prospects.

The rally in equities has been driven by a combination of factors, including the return of liquidity to markets, a pivot by central banks, and a weakening dollar. These conditions have created a favorable environment for equities, as investors have sought to capitalize on the improving economic outlook. The surge in yields globally has also contributed to the equity market's gains, as investors have sought higher returns in the face of rising interest rates.

Retail holders have been aggressively offloading Bitcoin, shedding 247,000 BTC year-to-date, equivalent to a $25.7 billion sell-off in spot terms. Meanwhile, smart money is stacking aggressively. Businesses have scooped up over 157,000 BTC, with ETFs and government wallets following suit. This tug-of-war between weak hands and heavy hitters is keeping BTC locked in a tight range.

Historically, a weaker dollar unlocks risk-asset beta, lifting equities and crypto alike. At press time, the U.S. dollar index slid to its weakest level since early March, down 11% year-to-date. The U.S. stock market is syncing up perfectly with this move. Just last week, the S&P 500 climbed +5.3%, its second-best weekly gain since November 2023. The Nasdaq 100 surged 6.8% this week, marking its second-best performance since November 2023, as the stock market continues its nearly uninterrupted upward momentum. Meanwhile, Bitcoin started the week at $104.6K but remains stagnant around $104K, struggling to gain traction as investors shift their focus to equities.

This divergence in risk flows signals a sharp retail rotation into traditional assets. With macro FUD easing, the 90-day tariff pause, and the Fed’s persistent hawkish grind, BTC’s near-term retail bid appears capped. This rotation is a key sentiment inflection – one trader can’t afford to ignore. Now, it’s up to the whales and institutions to soak up the selling pressure. But whale counts remain sidelined, stuck at 1,448 since the early-April dump. Meanwhile, spot ETFs are making noise. BlackRock’s IBIT ETF has hauled in a cool $800 million in BTC inflows in under five days. The big players are stepping in, but with retail chasing capital over conviction, BTC’s next move hinges on how deep these heavy hitters want to go.

The divergence between equities and Bitcoin highlights a new market reality that investors need to watch. As the economy continues to recover and monetary policies remain accommodative, equities are likely to remain the preferred asset class for many investors. However, the potential for Bitcoin to rally in the future cannot be ruled out, as the cryptocurrency continues to gain mainstream acceptance and adoption. Investors will need to carefully monitor the evolving market dynamics and adjust their portfolios accordingly to capitalize on the opportunities presented by this new market reality.