Stocks Rip, Crypto Dips
January has been a slog for crypto bulls, but traditional stock indices are marching to new highs! Why have trad markets decoupled?
The total crypto market cap (TOTAL) has plummeted 12% from its BTC ETF debut highs and is currently down 1% on the month, but the broad market S&P 500 is up 2.1% and tech-heavy Nasdaq 100 have respectively gained 2.1%, and 4.7% off their monthly opens!
TradFi bulls may be celebrating the moment, but it could be the bears who are about to come into control: historically, interest rate peaks coincide with stock market tops.
While America’s Federal Reserve uses interest rate cuts as their primary monetary policy response to a deteriorating economic situation, every time cuts have arrived, they’ve failed to prevent the market declines they were intended to prevent.
Until the impetus for economic contraction presents itself, it is likely market participants will continue to remain bulled up on the potent cocktail that is an accommodative macroeconomic backdrop and impending rate cuts.