Charles Schwab's Jim Ferraioli suggests Bitcoin has lost its momentum trade, diverging from the S&P 500's recent gains. Bitcoin fell over 16% last month while the S&P 500 rose 5%, indicating investors are rotating capital into traditional assets. This shift is not attributed to crypto-specific issues but rather a broader market dynamic where other opportunities are more attractive. This matters for crypto as it signals a potential deceleration in new capital inflows and a re-evaluation of risk-on assets. Investors should watch for a sustained return of capital to high-beta assets as a sign of renewed crypto momentum.
Bitcoin's recent underperformance relative to the S&P 500 signals a rotation out of high-beta assets. This indicates institutional capital is currently favoring traditional markets, potentially limiting immediate upside for Bitcoin and Ethereum.
This story highlights a market structure where capital rotation dictates crypto's performance more than internal narratives. Bitcoin's correlation with broader risk appetite is weakening, implying a period of consolidation. This suggests a muted upside for crypto unless traditional markets face significant headwinds.
Bitcoin has fallen more than 16% over the past month even as the S&P 500 has gained 5%, a divergence that Charles Schwab says is being driven less by crypto-specific problems and more by investors chasing opportunities elsewhere. According to…