The recent announcement by Pfizer of a potential Covid-19 vaccine sparked an immediate rally of global stocks worst hit by the pandemic response. The rally helped major indices including the New York Stock Exchange (NYSE) Composite Index and Europe’s Stoxx to go up by approximately 4%.
On the other hand, stocks that benefited from lockdown restrictions went down as the vaccine raises hopes for a return to normal life. Still, it appears the same vaccine hopes did not dampen interest in bitcoin, another major beneficiary of lockdown restrictions. In a performance that highlights the digital asset’s decoupling from traditional markets, bitcoin continues to trade above $15,000 some 48 hours after the vaccine announcement.
After initially crashing alongside traditional markets earlier in the year, bitcoin staged a quicker recovery as more businesses and individuals explored the possibility of using the crypto for payments. Between March 12–the infamous ‘Black Thursday’–and October 1, bitcoin surged more than 260%, making it one of the best-performing assets in 2020.
Meanwhile, a series of announcements by large investors that they are buying bitcoin, starting in early October helped to spark another bitcoin rally. Furthermore, data also shows that the excitement around US Elections may have helped bitcoin to go past the 2018 year high.
Vaccine Hopes Drive Markets
Yet when Pfizer announced that a vaccine had been found to be more than 90 per cent effective in a late-stage trial, the value bitcoin did not change. Instead, it is traditional stocks that rallied with the NYSE Composite Index going up 500 points from 13,214 points on November 6 to 13,726.
An analysis by one publication shows that stocks of US airlines led the rally with 15%, while IAG, the parent to British Airways closed the day with a 25%. Airbus was up 19% on the day while Rolls Royce gained 44%. Other gainers include JPMorgan Chase and Bank of America which advanced more than 13%.
In contrast, stocks of companies that are seen as beneficiaries of the pandemic went down. Zoom dropped 17% as did Netflix (7%) while Amazon, one of the biggest beneficiaries of the lockdown restrictions, went down almost 4% on the day. Some of these companies face a reversal of fortunes if and when the Covid-19 vaccine becomes available.
Despite benefiting from lockdown measures, the data suggests that bitcoin’s performance is not tied to events that influence traditional markets. As Markets.bitcoin.com data shows, the digital asset dropped marginally from $15,563 on November 6 to $15,152, some 72 hours later.
Therefore, bitcoin is exhibiting signs that it belongs to an alternative asset class. The top crypto’s decoupling from traditional markets only makes it more appealing to investors searching for a better store of value.
What are your thoughts about bitcoin’s decoupling from traditional markets? Share your views in the comments section below.
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