Bitcoin Is Getting Slammed This Month. At Least It’s Doing Better Than Stocks.

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Bitcoin
and other cryptocurrencies were holding firm Friday, set to close out September relatively strong—compared with the stock market, at least, which is on track to cap one of the worst losing streaks since the 2008-2009 financial crisis.

The price of Bitcoin was mostly unchanged over the past 24 hours, sitting around $19,500, as it continued to keep a distance from its weekly lows around $18,750—just a touch above the yearly low below $18,500.

“Bitcoin is still above the $19,000 level despite a near 4% drop in the Nasdaq” on Thursday, said Edward Moya, an analyst at broker Oanda. “It appears Wall Street believes crypto is close to the bottom and will become an attractive diversification strategy.”

Bitcoin began the month just above $20,000, so while it recorded a decline across September, the loss is about 2%, while stocks have fallen closer to 10%.

Compared with the

Dow Jones Industrial Average
—which saw its worst one-month performance since the Covid-19 selloff of March 2020—it’s a success, especially since cryptos have shown to be largely correlated to stocks. Both the Dow and

S&P 500
have suffered in the past month as investors fled risk-sensitive assets amid fears that financial conditions would continue to tighten and that a recession was looming.

Bitcoin was trading near $20,500 earlier this week amid optimism that cryptos had hit their bear-market bottom and were rebounding—but that bullish sentiment has faded amid the latest selloff. While it may not yet be time for digital to stage a major rally, crypto traders will be eyeing Bitcoin’s strength relative to stocks as a good sign.

Yet the macro backdrop remains gloomy. Rising interest rates and the threat of a global slowdown are unlikely to give Bitcoin a boost to $30,000, where the token was trading before a selloff in mid-June selloff, let alone the November 2021 record highs near $69,000. Higher rates dampen demand for bets like Bitcoin, and recession would likely only compound the problems for risk-sensitive assets.

“Bitcoin has held steady in recent weeks and days,” said Jacob Sansbury, CEO of trading platform Pluto. “This macro setup is precisely what Bitcoin was designed for, and so it’s not surprising that chain analysts and other crypto observers are seeing a significant big spike in volume in Bitcoin trading and buying.”

For stocks, the outlook for October looks like a coin flip.

In Septembers where the Dow has finished down 7% or more—as it is poised to do—it tends to fall again, but not as badly, in the following October, on average notching a decline of 1.5%. Less than 50% of Octobers following such a bad September deliver a move higher.

That could mean more rangebound trading for Bitcoin, or even a retest of its yearly lows. Some analysts think that’s in the cards. If Bitcoin can substantially buck its link to stocks, that may be good for the ecosystem of digital assets—but bad for traders who rely on indicators like stock market sentiment to predict price swings.

Crypto market participants are cautious. “I don’t want to get too far ahead of myself because the June lows for Bitcoin and crypto could certainly get broken to the downside,” said Sansbury.

Beyond Bitcoin,

Ether
—the second-largest crypto—was less than 1% lower and holding above $1,300. Smaller cryptos or altcoins were more mixed, with

Solana
up 1% and

Cardano
down 1%. Memecoins, initially intended as internet jokes, exhibited much of the same, with

Dogecoin
and

Shiba Inu
largely unchanged.

Write to Jack Denton at jack.denton@dowjones.com