Santiment believes a five-week divergence between Bitcoin, equities and gold suggests the cryptocurrency is now trading on its own catalysts. Since Aug. 18, Bitcoin’s market capitalization has increased by 36%, compared with a 0.8% gain for the S&P 500 and a 1.5% decline in gold.

Santiment estimates that the breakout began in mid-August after smaller holders controlling between 0.1 and 10 BTC capitulated. The subsequent advance received support from shifts in liquidity, renewed ETF demand and a series of short squeezes.

As Bitcoin moved through resistance levels, bearish traders had to close short positions, adding momentum to the rally, according to Santiment.

The analytics firm said equity indices remain near record highs but face pressure from higher interest rates and uneven investor participation. Santiment attributed gold’s weakness to expectations that tight monetary policy will persist for longer.

South Korean retail investors remain on the sidelines

CryptoQuant highlighted a separate change in Bitcoin demand after the cryptocurrency broke above $82,000, a level that had previously served as a strong resistance zone. At the same time, the Kimchi premium — the difference between Bitcoin prices on South Korean and international trading venues — narrowed and then became a discount, according to CryptoQuant data.

CryptoQuant said participants in South Korea’s cryptocurrency market are predominantly retail investors. However, Bitcoin’s last two strong rebounds occurred without support from Korean retail traders and instead involved large overseas investors.

According to CryptoQuant, that pattern may indicate a shift in market sentiment from a downtrend to an uptrend cycle. The firm expects South Korean retail investors to return more actively during later stages of the uptrend cycle.

Factors that could shape further moves

Santiment said Bitcoin may continue outperforming traditional assets if ETF demand, adequate liquidity and institutional participation remain in place. However, the firm also pointed to rising leverage and growing euphoria among market participants, which it said increase the risk of a short-term market shakeout.

For equities, Santiment said strong corporate earnings remain important against a backdrop of high bond yields. Gold may need lower real interest rates or renewed safe-haven demand to regain market leadership, according to the firm.

CryptoQuant CEO Ki Young Ju previously said the current Bitcoin bull cycle was only beginning.

Source: Incrypted