Bitcoin firmed up early Tuesday, having remained rock steady during the recent crash of fiat currencies against the U.S. dollar.
The top cryptocurrency by market value rose over 5% to $20,350, according to CoinDesk data. Ether, the second-largest cryptocurrency, rose 4% to $1,390.
The uptick follows a period of uncanny resilience to turmoil in traditional markets. Bitcoin traded between $18,000 to $20,000 in the past five days even as major fiat currencies like the British pound, Japanese yen and Chinese yuan dropped sharply against the U.S. dollar.
The pound, in particular, fell to an all-time low of $1.035 on Monday as the government's plan to implement the biggest tax cuts in 50 years while boosting government borrowing and spending amid high inflation spooked investors. The Chinese yuan fell to 7 per dollar, the lowest since May 2020, triggering fears of a rout in global commodities.
If that's not enough, the S&P 500, Wall Street's benchmark index, ended Monday at its lowest level of 2022, extending the past week's 4.5% slide. The Dow dropped more than 300 points on Monday, finishing in bear market territory.
Bitcoin has historically moved more or less in lockstep with stocks. So, the cryptocurrency's latest resilience has raised hopes of its eventual evolution as a safe haven asset.
However, it may be too early to conclude that the cryptocurrency has permanently decoupled from traditional markets.
The S&P 500 futures rose 0.7% early Tuesday, perhaps helping bitcoin cross above $20,000. The dollar index, which gauges the greenback's value against major currencies, fell 0.46% to 113.58.
“The U.S. dollar is a mega bubble," Charlie Morris, chief investment officer at ByteTree Asset Management, said. "The [Federal Reserve] is making a huge error by overdoing [tightening],” “When they reverse, there will be a flood of money into bitcoin and gold.”