Bitcoin Decouples from S&P 500 as US Treasury Yields Surge

The 10-year US Treasury note yield has reached 5.28 percent, its highest level since May 15, 2002. This milestone is significant, as it marks a shift in the risk-free rate of return, making it more expensive to hold uninterest-bearing assets like Bitcoin.

According to André Dragosch, head of research for Europe at Bitwise, the trend decoupling between the S&P 500 and Bitcoin is the strongest in eleven years. The correlation between the two has reached its lowest level since 2015, indicating that Bitcoin is no longer closely tied to the stock market.

This development has important implications for investors, particularly in Germany, where the 10-year Bund yield is significantly lower at 3.66 percent. The yield gap between the US and German markets is roughly 1.6 percentage points, making it more challenging for German investors to achieve the same returns as their US counterparts.

Dragosch attributes the shift in Bitcoin's price drivers to the dollar, which is currently influencing the market more than the stock market. As a result, investors should focus on rate decisions and inflation data rather than quarterly earnings from technology groups.