Bitcoin rises 36% in five weeks, stocks and gold lag behind

Bitcoin has completely decoupled from stocks and gold over the past five weeks. While the S&P 500 gained just 0.8% and gold lost 1.5%, the Bitcoin price rose 36% compared with its level on 18 August. According to market research firm Santiment, several factors played a role in that remarkable divergence. At the time of writing, the coin is trading around $86.500, up 1.4% in the past 24 hours.

Bitcoin is available at OKX and Bybit.

In brief:

• Bitcoin rose 36% in five weeks, while the S&P 500 barely moved and gold fell.
• A liquidity impulse, ETF demand and short squeezes underpinned the price rise.
• Santiment warns that rising leverage and euphoria create correction risk in the short term.

Three factors drove Bitcoin higher

Santiment points to a combination of developments that set the rally in motion. In August, smaller Bitcoin holders with positions between 0.1 and 10 BTC capitulated, which marked the bottom. Sentiment then turned.

From September, the US Treasury doubled the size of its buyback programmes for long-dated government bonds, bringing extra liquidity into the market. At the same time, demand via Bitcoin ETFs picked up again, and repeated short squeezes forced bearish traders to cover their positions once Bitcoin broke through resistance levels. Earlier, it was already clear how Bitcoin accelerated through a zone of short liquidations above $85.000.

Stocks and gold face their own headwinds

The S&P 500 may still be near record levels, but it is under pressure from higher interest rates and uneven market breadth. Gold is struggling now that markets are pricing in a prolonged period of tighter monetary policy, which keeps demand for the precious metal as a safe haven limited.

For now, Bitcoin appears to be moving under its own steam, driven by crypto-specific factors rather than macroeconomic movements. Analysts are also looking at the key levels that could determine price development in the coming months.

Short-term risks remain

Santiment indicates that Bitcoin can continue to outperform if ETF demand, liquidity and institutional interest persist. However, increasing leverage and growing euphoria among investors raise the risk of a brief pullback.

For stocks, strong corporate earnings are needed to offset the pressure of high interest rates. Gold will probably need falling real rates or renewed demand for defensive assets to reclaim its leading position. Meanwhile, institutional players are making themselves heard too: Strategy recently bought another 950 Bitcoin, pushing it to the threshold of 846,000 BTC.