The Great Decoupling: Bitcoin Carves its Own Path

Bitcoin Decouples

One of the long-term bearish arguments against Bitcoin is that it is just another “risk-on” asset. Historically, Bitcoin has acted like a leveraged Nasdaq product, dramatically outperforming in equity bull markets and underperforming in bear markets. However, yesterday, Bitcoin and the iShares Bitcoin ETF (IBIT) went a long way in disproving that. Despite the carnage in equities yesterday, Bitcoin rose 3%, regaining its 50-day moving average.

The relative strength in the world’s largest cryptocurrency stood out like a sore thumb Monday, but it’s not just a one-day occurrence; it is becoming a trend. While the Nasdaq and the major US equity indexes are stuck below their long—term 200-day moving averages, Bitcoin is above its mid-term 50-day moving average. Meanwhile, Bitcoin is nearly flat, while the S&P 500 Index ETF (SPY) and Nasdaq 100 Index ETF (QQQ) are each down double digits. Below are four reasons the breakout in Bitcoin is just beginning:

Bitcoin is Correlated to the Money Supply

Global M2 measures the world’s money supply, or the different forms of liquid assets that can be quickly turned to cash. Bitcoin exhibits a shockingly high correlation when compared to M2 (with a 60-to-90-day lag). With central banks primed to print money and global M2 set to soar, Bitcoin should follow suit.

Bitcoin is a Safe-Haven Against Tariffs & Fiat Mayhem

With China and the United States currently stuck in the middle of a nasty and escalating trade war, there is a plethora of macroeconomic uncertainty. Unlike fiat currency, Bitcoin has unique and powerful attributes that include scarcity, decentralization, and global accessibility. As trade wars press on, international investors will likely park some of their funds in Bitcoin.

MicroStrategy Monthly Bull Flag Breakout

MicroStrategy (MSTR) was the first public company to adopt “The Bitcoin Standard” aggressively. Since the company added Bitcoin to its balance sheet, it has been a top Wall Street performer and a leading indicator. MSTR, a proxy for Bitcoin, is breaking out of a multi-month bull flag pattern. When the stock did this in late 2024, it more than doubled in less than three months. In addition, the stock is clearing an inside doji (indecision) candle to the upside – adding an additional layer of bullishness to the breakout.

Bitcoin has Transformed into an Institutional Asset

MSTR’s success with the Bitcoin standard is transforming into a domino effect on Wall Street. Building off MicroStrategy’s success, companies with slowing legacy businesses but rich cash stacks can utilize that cash to buy Bitcoin, breathing new life into the company. GameStop (GME) and Semler Scientific (SMLR) are recent examples of companies that have added Bitcoin to their balance sheets.

Bottom Line

Bitcoin’s decoupling from traditional “risk-on” assets is not a fleeting anomaly but the beginning of a significant shift. As global money supply expands, geopolitical tensions persist, and institutional adoption accelerates, Bitcoin’s unique value proposition as a scarce, decentralized, and globally accessible asset is increasingly resonates with investors.

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This article originally published on Zacks Investment Research (zacks.com).

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