The cryptocurrency industry is often described as a risk-on asset class that tends to underperform in times of economic uncertainty.
Although the stock market also falls in this category, at least to an extent, it has been on a wild run in the past few weeks, with multiple new all-time highs from the most prominent indexes. At the same time, crypto has suffered and the largest digital asset have plummeted since March.
US Stock Market on a Roll
Perhaps driven by the hype around Nvidia, the US stock market has been on a massive bull run since the start of the year. Let’s take the largest and arguably most prominent index – the S&P 500 – for example. It entered 2024 at under 4,800 but skyrocketed to roughly 5,500 earlier this week to chart a fresh peak.
The Nasdaq Composite has been on an even more impressive run, soaring by 19.8% since the start of the year and charting a peak of its own at nearly 18,000 this week.
The Dow Jones Industrial Average, which has little connection to the hot tech sector and has no exposure to the top performer Nvidia, has underperformed, however. Its yearly gains are less than 4%, but it still managed to paint a new all-time high earlier this year of around 40,000.
The situation with the risk-on crypto assets like BTC and ETH is quite different, though, at least in the past several weeks.
What About BTC/ETH?
Bitcoin’s year has also been quite bullish, driven by the approval of spot BTC ETFs in the States in January. Although the fourth halving also took place earlier this year, an event typically regarded as the catalyst for bull runs, the asset has actually underperformed since its completion.
ETH saw a regulatory nod from the US SEC as well, as the agency greenlighted spot Ethereum ETFs last month. However, they haven’t launched yet and ETH’s price has lost almost all gains that came after the positive news.
As such, both BTC and ETH are down by around 10% since their yearly peaks and have decoupled from the US stock markets. However, it’s worth mentioning that although they have declined in recent weeks, they are still more in the green than the aforementioned indexes.
BTC is up by 50% since the start of 2024, while ETH has gained 54% within the same timeframe.
