An end to the correlation between Bitcoin and luxury watches | CoinDesk JAPAN

If there’s one thing Bitcoin (BTC) and luxury goods have in common, it’s scarcity. And Bitcoin and luxury watch prices were positively correlated until spot exchange-traded fund (ETF) optimism took over the crypto market in late 2023.

Much has been written about the relationship between luxury watches and crypto assets. Both prices rose during the pandemic as central banks and governments pumped record amounts of easy, cheap money into the economy and crypto traders needed something to buy with their wealth.

(WatchCharts.com)

According to data from WatchCharts.com, the peak in luxury watch prices occurred between the end of the 2021 bull market and the beginning of the 2022 crypto recession. As expected, many traders cashed out at the peak and moved on to other assets.

For much of 2023, the price of luxury watches and CoinDesk 20, a liquidity index that tracks the top tokens by market cap, moved in parallel. However, the two diverged in the third and fourth quarters of 2023 as excitement surrounding the Bitcoin Spot ETF began to permeate the crypto market, pushing the CoinDesk 20 higher. The U.S. Securities and Exchange Commission (SEC) approved a Bitcoin ETF in early January.

Greta Yuan, head of research at digital asset solutions company VDX, said another reason for the price rise is that Bitcoin is attracting institutional investor interest thanks to ETFs. He points out that watches lack this.

“Bitcoin is known to be essentially digital gold, so it’s no surprise that it has held its value better than a luxury watch over the past year,” she told CoinDesk in an email interview. answered. “BTC recently bounced above $42,000, showing strong investor demand to buy the dip,” she said.

Meanwhile, global monetary tightening continued to put pressure on prices for luxury watches.

“The decline in prices is due in part to tighter monetary policy and less speculative trading in luxury assets,” Morgan Stanley analysts wrote in a January report on luxury watch prices. There is.

“Prices were relatively stable in the fourth quarter and December of 2023 (likely influenced by holiday shopping trends),” said Charles Tian, ​​founder of WatchCharts.com. ), overall market health indicators such as inventory age and total supply remain at historically high levels,” CoinDesk said in a note.

(WatchCharts.com, CoinDesk Indices)

Cryptocurrency naysayers point out that every drop in Bitcoin’s price proves its lack of usefulness, but Nick Ruck, COO of ContentFi Labs, doubts the usefulness of watches. It shows.

“Investors are finally waking up to the empty promise of watch utility,” he said in a note. “Time notifications, a unique selling point of watches, have long been supplanted by modern technology such as smartphones.”

｜Translation: CoinDesk JAPAN
｜Edited by: Toshihiko Inoue
｜Image: Shutterstock
｜Original text: Bitcoin ETF Has Broken BTC’s Pandemic-Era Price Correlation With Luxury Watches