Pro-Crypto Trump Drives Split Between Bitcoin, Global Equities

(Bloomberg) — Bitcoin and global stocks are diverging as Donald Trump’s election campaign and a surge in interest in cryptocurrencies boost the largest digital asset, while stocks are swayed by the uncertain outlook for corporate earnings.

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According to data compiled by Bloomberg, the 30-day correlation coefficient for Bitcoin and MSCI’s index of world stocks is falling toward minus 0.20, a rare occurrence since the measure has generally been positive since 2020. A reading of 1 indicates the assets are moving at the same pace, while minus 1 indicates an inverse tie.

Trump used to be a crypto critic but has taken a much friendlier stance in recent weeks as the sector has emerged as an influential player in the 2024 presidential election with large donations to his political action committee. Betting markets are showing the Republican candidate as the favorite for the November vote and are supporting Bitcoin in hopes of a more supportive U.S. regulatory environment.

“Bitcoin is now a proxy for a Trump victory,” said Sean McNulty, director of trading at Arbelos Markets. “There are no clear winners and losers for stocks from the Trump trade as such.”

The original cryptocurrency has gained about 11% in the past month, compared with a less than 2% rise in global stocks. Trump emerged emboldened from a televised debate with faltering President Joe Biden and defiantly responded after surviving an assassination attempt.

Vice President Kamala Harris is trying to close the gap with Trump after Biden decided to drop his reelection bid and became his likely Democratic rival. There is still little clarity about his views on the digital asset industry. Trump is expected to speak at a Bitcoin conference on July 27.

Meanwhile, global stocks are under some pressure after a mixed start to the second-quarter earnings season, with investors looking for evidence that this year’s rally driven by artificial intelligence and technology firms is still going strong.

Bitcoin jumped nearly 51% in 2024, boosted by demand for private U.S. exchange-traded funds and Trump’s agenda. The token was steady at $65,790 as of 11:10 a.m. Wednesday in Singapore. MSCI’s gauge of global stocks was little changed after a yearly gain of nearly 12%.

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