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Pfizer’s recent announcement of a potential Covid-19 vaccine triggered an immediate rally in global stocks hardest hit by the pandemic response. The rally helped major indices, including the New York Stock Exchange (NYSE) Composite Index and the European Stoxx, to rise by around 4%.
Decoupling of Bitcoin
On the other hand, stocks that have benefited from blocking restrictions have decreased as the vaccine bodes hope for a return to normal life. However, it appears the vaccine hopes themselves have not dampened interest in bitcoin, another major beneficiary of the blocking restrictions. In a performance that highlights the decoupling of the digital asset from traditional markets, bitcoin continues to trade above $ 15,000 approximately 48 hours after the vaccine was announced.
After initially collapsing alongside traditional markets earlier in the year, bitcoin has staged a faster recovery as more businesses and individuals have explored the possibility of using crypto for payments. Between March 12, the infamous “Black Thursday”, and October 1, bitcoin grew by more than 260%, making it one of the best performing assets in 2020.
Meanwhile, a series of announcements from big investors buying bitcoin, starting in early October, helped trigger another bitcoin rally. Furthermore, the data also shows that the enthusiasm for the US elections may have helped bitcoin to surpass the high of the year 2018.
Vaccine hopes drive markets
However, when Pfizer announced that a vaccine was found to be more than 90% effective in a late-stage study, bitcoin’s value did not change. Instead, it is traditional stocks that rallied with the NYSE Composite Index climbing 500 points from 13,214 on November 6 to 13,726.
An analysis of a publication shows that shares of US airlines led the rally with 15%, while IAG, the parent of British Airways, ended the day with 25%. Airbus was up 19% on the day, while Rolls Royce gained 44%. Other earnings include JPMorgan Chase and Bank of America which gained over 13%.
Conversely, the stocks of companies considered to be beneficiaries of the pandemic have decreased. Zoom fell 17% as did Netflix (7%) while Amazon, one of the biggest beneficiaries of blocking restrictions, fell nearly 4% over the course of the day. Some of these companies will face a reversal of fortune if and when the Covid-19 vaccine becomes available.
Despite benefiting from blocking measures, the data suggests that bitcoin’s performance is not tied to events affecting traditional markets. As data from Markets.bitcoin.com shows, the digital asset dropped marginally from $ 15,563 on November 6 to $ 15,152, approximately 72 hours later.
Therefore, bitcoin is showing signs that it belongs to an alternative asset class. Decoupling the major cryptocurrency from traditional markets only makes it more attractive to investors looking for a better store of value.
What do you think about the decoupling of bitcoin from traditional markets? Share your views in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons
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