Bitcoin/S&P 500 Ratio Hits All-Time High of 17.725

Bitcoin's performance relative to the S&P 500 has reached a new milestone, reflecting the growing influence of traditional finance on the cryptocurrency market. The Bitcoin/S&P 500 ratio hit an all-time high of $17.725 on May 8, indicating Bitcoin's increasing dominance over traditional equities. This development aligns with broader market trends, including Bitcoin's recent move to briefly surpass Google in market capitalization.

The surge in Bitcoin's value comes amid growing institutional influence, with analysts noting a significant influx of liquidity from institutions and exchange-traded funds (ETFs). This has prompted a rethinking of the traditional Bitcoin cycle theory, with a greater focus on the liquidity influx from institutional investors. Investors are increasingly viewing Bitcoin as a hedge against financial and US Treasury risks, given the prevailing jitters in traditional markets.

Reports indicate cumulative inflows of $3.5 trillion into US equity, corporate bond, and Treasury funds since 2007, with $2.5 trillion of that surge occurring post-2020. This data highlights a strong investor appetite for US assets. However, Bitcoin's ratio spike suggests a parallel shift, with some investors favoring decentralized assets amid global economic uncertainty, including inflationary pressures and geopolitical tensions.

US equity funds, which captured $1.2 trillion of the inflows, saw a $100 billion net outflow during the 2022 bear market. This temporary risk aversion was seemingly sidestepped by Bitcoin, as its long-term growth outpaced the Nasdaq over multiple timeframes. Rising US Treasury yields, hitting 4.641% in early January 2025, marked the highest since May 2024. This dampened equity fund inflows, potentially driving investors toward Bitcoin as a hedge against traditional market volatility.

At an all-time high, the Bitcoin/S&P 500 ratio indicates that Bitcoin's value has grown significantly more than the S&P 500. This suggests stronger investor confidence and outperformance in crypto over stocks. The growing adoption of Bitcoin and the prevailing jitters in traditional markets have led investors to see it as a hedge against financial and US Treasury risks.