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It's been just over a year since the SEC legalized bitcoin spot ETFs. And in that time one thing has become fairly obvious: "Digital gold" may not be the best description.
The stock market had a huge 2024, with the S&P 500 (^GSPC) rising just under 25%. Bitcoin (BTC-USD), meanwhile, rose around 130%.
And while the absolute returns are obviously very different, both markets have traveled in the same direction, with bitcoin rising when investors feel like taking risks and seeming to abandon aspirations for a stable, uncorrelated digital store of value.
Since the election, these trends have only become more apparent amid an especially unusual synchronization for the world's largest stock index and its top cryptocurrency.
(BTC-USD)
In the month after the election, the S&P 500 surged 6.5% on the euphoria of a business-friendly Trump administration as bitcoin rose 50% and cracked $100,000 for the first time.
And since then, the mood has moderated for both stocks and bitcoin, with the S&P 500 falling below 5,900 and bitcoin falling back below its six-figure milestone.
(^GSPC)
To be clear, however, the walk-back is barely noticeable amid the mega-gains. The payoff is already clear for crypto investors, who have found a friendly ear with Trump, and digital asset enthusiasts and venture capitalists plowed tens of millions into his campaign's coffers.
Incoming SEC chair Paul Atkins is viewed as crypto-friendly. And reports Trump might sign a day one executive order to deliver an immediate win to crypto zealots shows these investments paying off. Bitcoin may be down 10% since mid-December, but it's up 40% since Election Day.
A year ago, the launch of bitcoin ETFs made cryptocurrencies a part of the mainstream conversation for investors allocating their capital. A year later, the industry has stepped into a mainstream role in presidential politics.
If the $107 billion in bitcoin spot ETFs shows a useful lesson, it's that making bitcoin easier to own can be a tailwind — something investors have clearly been thinking about since Election Day.
But even if bitcoin has earned a spot in investors' diversified portfolios thanks to these ETFs, the role it plays seems clear cut: as a risk asset that, more often than not, goes up and down on the tide of the stock market.
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