BTC Price Appears to Be Decoupling from Stock Market Downturn

In light of global financial markets tanking on the heels of the recently-announced Trump tariffs, investors are once again discussing the correlation, or potential lack thereof, between stock prices and cryptocurrency prices.

As of late, there have been mixed signals as to whether Bitcoin and other popular cryptos are trading in tandem with stocks, or have the potential to decouple from the stock market downturn. Rates for cryptocurrency can be found on websites such as Binance. Taking a look at the latest price action, it may be tough to make the decoupling argument.

However, as seen from a short-lived price trend earlier this month, there may be a path for Bitcoin and altcoins to break free from high positive correlation with the stock market, and begin to trade as a safe haven asset amid global economic uncertainty.

Bitcoin’s Rollercoaster Ride During the Ongoing Tariff Tumult

Until recently, there has been a growing argument that cryptocurrencies, while an alternative asset class, may not necessarily offer the potential for uncorrelated returns as it has in the past.

Per Bloomberg, BTC has had a strong correlation with the Nasdaq 100 since the onset of the Covid-19 pandemic in 2020. Price action with Bitcoin in more recent days suggest that Bitcoin could continue to trade more like stocks than other alternative asset classes, during times where market sentiment shifts from “risk on” to “risk off.”

For instance, as of this writing, Bitcoin prices are in freefall, at the same time that major stock market indices continue to experience a similar trading pattern. However, it should be noted that, while the crypto market hasn’t exactly been spared during the Tariff tumult, when it comes to Bitcoin prices, the market’s reaction has been slightly different.

On April 4, just before the latest steep dip in Bitcoin prices, the price of BTC was in fact trending higher, while the stock market rout continued unabated. A big reason for this may have to do with remarks made by Federal Reserve Chairman Jerome Powell that same trading day.

Economy Uncertainty Could Pave a Path for Higher BTC Prices

Jerome Powell’s remarks on the tariff news signaled little in the way of potential monetary changes ahead. President Trump continues to prod the Fed Chair to more aggressively reduce interest rates, pronto.

However, Powell appears to be maintaining a cautious stance. Namely, due to his statement

that it is “too soon to say what will be the appropriate path for monetary policy,” with regards to the tariffs, which Powell believes could lead to “higher inflation and slower growth.”

Yet while Fed officials still haven’t shifted their official stance, Bitcoin prices likely rose in response to Powell’s remarks, on speculation that the central bank will likely lower rates if tariffs have a severe impact on U.S. economic growth and unemployment. As rates go down as the inflation issue remains unresolved, this could be a boon for the U.S. Dollar alternatives.

While investors have already flocked to physical gold in light of growing uncertainty, the trade has yet to fully play out in other alternatives, including Bitcoin. Although whether BTC should even be considered akin to gold has been up for debate, various factors, including Bitcoin’s growing use in international payment settlement may help to bolster the argument that it’s a digital-based alternative to the ancient store of value/medium of exchange.

Decoupling Potential Notwithstanding, be Wary of Further volatility

Crypto prices, in particular Bitcoin prices, could experience a long-term benefit from the recent uncertainty, but that may not matter much in the near-term. The dust has yet to settle when it comes to the fear and uncertainty triggered by the tariff news.

As financial markets stay in a downward spiral, once again Bitcoin and other crypto prices could be subject to further rounds of high volatility. For now, even those bullish on crypto may continue to sit on the sidelines, as evidenced by Stablecoin supplies hitting record highs.

Furthermore, only time will tell whether a permanent shift in the global financial and geopolitical order will arise. If tariff tensions de-escalate, Bitcoin’s positive correlation with stocks could persist.