Major cryptocurrencies are showing signs of strength despite a surging dollar wreaking havoc on global stock markets and major currencies this week.
The S&P 500 Index and the tech-heavy Nasdaq have shed more than 4% each in the past seven days. Bitcoin, meanwhile, has notched a 4.4% gain and Ether is up 5.5% in early morning trading U.K. time Thursday.
The disconnect is significant given how closely Bitcoin, Ether and other cryptocurrencies have tracked equities over the last several quarters. This correlation has prompted skeptics to dismiss Bitcoin as a haven from inflationary economies and their sovereign currencies.
On Sept. 28, the U.S. Dollar Index (DXY), a widely watched measure of the dollar’s relative value versus other major currencies, traded at its highest level since 2001 before paring its gains.
As a result of the U.S. Federal Reserve’s aggressive inflation-fighting policy, the euro is now trading firmly below $1, and emerging market currencies have swooned.
Against this macroeconomic backdrop, the fact that Bitcoin and Ether haven’t breached their June lows is drawing attention from investors.
Market observers point at several factors that could be contributing to digital assets’ outperformance.
Speaking at a conference in Singapore, Mike Novogratz, the CEO of Galaxy Digital, told Bloomberg that he believes crypto’s relative strength is due to most forced sellers already having exited the market over the summer.
“We’re in this weird equilibrium where there are a few buyers, there are a few sellers, and there’s not that energy in the market like you’re seeing in the equity market or the bond market where you have to sell, right?” Novogratz said.