Crypto Market Update: Bitcoin decoupling slowly from stocks

• The cryptocurrency market has resumed the recovery on Monday.
• Bitcoin and other major altcoins are doing generally better than traditional assets.

The cryptocurrency market resumed the recovery after a short-lived period of range-bound trading. All major digital assets have settled in a green zone, while Bitcoin managed to conquer critical resistance created by a psychological $7,000. The total capitalization of all digital assets in circulation reached $198 billion, which is the highest level since the recent crash on March 12-13. An average daily trading volume settled at $123 billion, while Bitcoin’s market dominance is registered at 65.2%.

Bitcoin follows the trend

While the bullish momentum on the cryptocurrency market correlates with the improvements in the traditional markets, Bitcoin and other digital assets are doing better than stocks and most of the commodities. The process of decoupling is gathering pace even though the safe-haven narrative is still under question. 

The global economy is badly hit by the consequences of COVID-19 pandemic, which becomes more and more obvious every day. Plummeting economic activity and galloping unemployment rates will be followed by skyrocketing inflation as trillions of dollars pumped into the economy will create strong inflationary expectations and trigger a sharp price increase. Once these consequences become obvious, people may start paying attention to Bitcoin and other digital assets with limited issuance. The deflationary nature of those coins will serve as a hedge against fiat currencies devaluation.

Gold-backed stablecoins have their glory hour

Gold is another asset that is traditionally used as a store of value; however, the reduced production and broken supply chains created a sharp deficit of physical gold. In these conditions, many investors turn to stablecoins backed by real gold. Thus, demand for Paxos Gold (PAXG) and Tether Gold (XAUT), two of the most popular gold-backed tokens surged into the end of March. This trend is set to continue supported by the general increased interest in stablecoins. 

Current market situation

From the technical point of view, Bitcoin’s upside momentum started fading away on approach to $7,150; however, the upside trend remains bullish as long as the coin stays above $7,000.  The first digital coin has gained over 5% since the beginning of the day and nearly 4% on a day-to-day basis.

Ethereum jumped as high as $155.79 on Monday. By the time of writing, the second-largest coin retreated to $154.50, which is nearly 8% higher from the beginning of the day.

Ripple’s XRP has been moving in sync with the market. The third-largest digital asset stopped short of $0.1900 and retreated to $0.1880 by press time. XRP/USD has gained 5% since the start of the day and about 4% on a day-to-day basis.

BTC/USD daily chart