Bitcoin is performing better than it should.
The largest cryptocurrency was trading at $67,378 on Monday morning, up 1.1% in the past 24 hours, essentially unchanged from the week, while the world around it took a sharp turn for the worse.
Among major currencies, ether rose 2.3% to $1,981, hovering below $2,000. BNB rose 1.4% to $624. Dogecoin rose 1.8% to $0.09. Solana rose 1.8% to $83.69, but is still down 1.5% for the week and remains the weakest major currency in seven days. XRP was flat at $1.35, down 1% for the week.
S&P 500 futures fell more than 2% in Asian trading. The VIX index surged to its highest level since the tariff storm in April. Oil prices have exceeded $100. The dollar just posted its biggest weekly gain in a year.
Meanwhile, senior strategist Ed Yardeni raised the probability of a U.S. market collapse from 20% to 35%, while cutting the likelihood of a collapse to just 5%.
“The U.S. economy and stocks are caught between Iran and trouble,” Yardeni wrote. “If the oil shock persists, the Fed’s dual mandate will be caught between rising inflation risks and rising unemployment.”
In the event of an economic collapse, overall risk assets tend to suffer as investors pull money out of more volatile assets and into cash, Treasuries or the U.S. dollar. Historically, Bitcoin has not been immune to this dynamic, and despite its reputation as a hedge, it has fallen along with stocks during every major risk-off event since 2020.
Elsewhere, NYDIG’s head of research Greg Cipolaro provided a framework for understanding Bitcoin’s price action compared to U.S. stocks in a note on Friday.
Cipolaro believes that Bitcoin’s recent parallel moves with U.S. software stocks reflect “shared exposure to the current macro regime” rather than structural convergence.
According to statistics, only about 25% of Bitcoin price movements are explained by correlation with stocks. The other 75% is driven by factors other than traditional stock indexes, he said.
The broader stock market picture remains grim. The Morgan Stanley Capital International (MSCI) global stock index fell 3.7% last week, with Asia suffering the biggest decline. South Korea has yet to fully recover from its record two-day plunge. Hedge funds have been adding to short positions in U.S. stock ETFs. The benchmark 10-year Treasury yield rose 6 basis points as traders priced in higher inflation from the oil shock.
The U.S. has performed better than most countries on the stock market front, with the S&P 500 down just 2% last week, in part because U.S. energy self-sufficiency makes it more insulated than Asian or European markets.
But a 2% drop in futures on Monday suggested the buffer is thinning.
