S&P 500 Surges Past $70 Trillion, Leaving Bitcoin in the Dust

The S&P 500 has experienced a significant gain this month, adding approximately $2.1 trillion to its market cap and pushing its total value to a record $70.5 trillion. The index's price currently stands at 7,723 points.

Meanwhile, Bitcoin is not keeping pace with the equity rally, despite having historically tracked stock prices more closely since the COVID-19 crash in early 2020. Bitcoin has only gained around 2% this month and remains stuck around $64,600.

The underperformance of Bitcoin can be attributed to the fact that the current equity rally is primarily driven by narrative-specific factors tied to AI and semiconductor stocks, rather than a broad macro risk-on impulse that would lift beta assets like BTC. This was echoed by Adam Haeems, head of asset management at Tesseract Group, who stated that the 'equity rally is being driven by areas to which bitcoin has little direct exposure, particularly AI and semiconductor stocks.'

While some aspects of macro, such as the renewed drop in oil prices due to the reopening of the Strait of Hormuz, may have a positive impact on all risk assets, they are benefiting stocks first. Haeems explained that 'lower oil prices resulting from a reopening of the Strait of Hormuz could benefit both markets, but through different channels. Equities receive a relatively immediate benefit through lower business costs. For bitcoin, the effect runs through inflation expectations and then Federal Reserve policy. That takes longer, and the outlook for September remains uncertain.'