Finally a tentative deal between the US and China that end the long-standing trade war. I was sitting in my favorite café, laptop open and a cup of coffee steaming beside me.
The headline promised relief for traditional markets, but something felt off. Bitcoin, which I’d been watching closely, didn’t share in the relief.
A Surprising Reaction
I recalled Bitcoin recently hitting an all-time high around $105K on May 12, only to drop back to about $102K soon after, dwelling around 103$.
It was puzzling because you’d expect that easing tariffs and improved macroeconomic conditions would boost investor confidence in all assets. But here was Bitcoin, pausing, while stocks were getting a clear lift.
Shifting Investment Focus
Over the past month, the stock market had risen steadily, with the S&P 500 futures increasing by about 7%. Meanwhile, Bitcoin had already enjoyed a 24% gain during the same period.
As much as I love Bitcoin, it felt like investors were beginning to see traditional stocks as a safer bet amidst the easing tensions between the US and China.
It wasn’t just Bitcoin; gold, too, saw a dip of 3.4% as the demand for safe-haven assets decreased when the US Dollar Index surged to its highest in 30 days.
The Bigger Picture
When I took a step back to analyze the situation, several factors became clear
Stock Market Rally:
Lower tariffs mean companies, especially those dependent on global supply chains, can expect better margins.
It’s no wonder that many investors are shifting their focus to stocks.
Bitcoin’s High Correlation with Stocks:
Despite its reputation as a hedge against economic instability, Bitcoin’s performance over the past 30 days has been closely linked to the stock market—with a correlation of about 83%.
When stocks do well, Bitcoin doesn’t get the same enthusiastic boost, and vice versa.
Institutional Influence:
Big names like BlackRock, along with companies like MicroStrategy (which has been buying BTC like it’s going out of style), are holding a significant share of Bitcoin.
In fact, combined, they own about 6% of all circulating Bitcoin. Even though some worry that concentrated holdings might pose risks down the line, the continued inflow of funds into Bitcoin, like the $2 billion poured into spot Bitcoin ETFs in early May, suggests that institutions are still bullish.
A Personal Reflection
As I sipped my coffee that morning, I thought about the shifting tides. It wasn’t that Bitcoin was losing its shine—it was just pausing in a moment when the rest of the market was in a different headspace.
Investors were chasing the clear benefits of a post-trade-war environment reflected in traditional markets. For Bitcoin, riding the wave of speculative gains might need to wait until its unique strengths scarcity and decentralized appeal stand out once more against the backdrop of renewed uncertainty in other sectors.
The Road Ahead
From my perspective, the short-term pullback of Bitcoin might even be a healthy correction.
With macroeconomic conditions favoring stocks and a shift in investor sentiment, I believe Bitcoin is simply taking a breather.
For me, that’s a reminder that markets are all about timing and balance—sometimes you run, and sometimes you let your heart catch up.
In the end, while the easing trade tensions between the US and China bring clear benefits to traditional markets, Bitcoin’s journey will always be a bit more unpredictable.
And that unpredictability is what keeps me—and countless others—enthralled by this wild world of cryptocurrencies.