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It’s been a little over a year since the SEC legalized bitcoin spot ETFs. And in that time, one thing has become quite clear: “Digital gold” may not be the best description.
The stock market had a great 2024, with the S&P 500 (^GSPC) up just under 25%. Bitcoin (BTC-USD), meanwhile, rose about 130%.
And while the absolute returns are clearly very different, both markets have been moving in the same direction, with bitcoin rising as investors look to take risks and abandon their ambitions for a stable, uncorrelated digital store of value.
Since the election, these trends have only become more apparent amid a particularly unusual sync between the world’s largest stock index and its flagship cryptocurrency.
As of 22:11:00 UTC. Market open.
In the month after the election, the S&P 500 rose 6.5% under the euphoria of a business-friendly Trump administration, as Bitcoin surged 50% to break $100,000 for the first time.
And since then, the mood for both stocks and bitcoin has muted, with the S&P 500 falling below 5,900 and bitcoin falling below its six-figure mark.
To be clear: the decline is barely noticeable amid the mega profits. The payoff is already clear for crypto investors, who have found a friendly ear in Trump, and digital asset enthusiasts and venture capitalists have pumped tens of millions into his campaign’s coffers.
Incoming SEC Chairman Paul Atkins is seen as crypto-friendly. And reports that Trump could sign an executive order on day one to allow crypto fanatics to win immediately show that these investments are paying off. Bitcoin may be down 10% since mid-December, but it is up 40% since Election Day.
A year ago, the launch of bitcoin ETFs made cryptocurrencies part of the mainstream conversation for investors about allocating their capital. A year later, the industry has come to play a mainstream role in presidential politics.
If the $107 billion worth of bitcoin spot ETFs demonstrates a useful lesson, it’s that making bitcoin easier to own can be a tailwind — something investors have clearly been thinking about since Election Day.
But even as bitcoin has earned a place in investors’ diversified portfolios thanks to these ETFs, the role it plays seems clearly delineated: as a risk asset that, more often than not, moves up and down with the tide of the stock market.
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