Netizen Premium | Bitcoin Deep Dive #11

SIGNAL CHANGE: Is Last Week's Rally In Stocks & Bitcoin Sustainable?

Markets Rally Despite Stagflation Warning Signals

Despite markets remaining in a deflationary RISK-OFF regime while macro fundamentals continue warning of stagflation, U.S. equity markets rallied 4.6% last week as President Trump walked back tariffs, China commentary, and Fed Chair Powell remarks—markets are acting as if policy misstep risks are now behind us, which we view as overly optimistic. We continue to see evidence of U.S. capital outflows via diverging momentum between U.S. stocks (BEARISH) and international stocks (NEUTRAL), plus the telling performance since our risk-off indicators switched on March 3: SPY is down 6%, global equities up 2%, Bitcoin up 11%, and Gold up 14%. The U.S. Dollar Index remains in NEUTRAL momentum but has transformed into the currency market's risk asset—whereas the dollar historically served as a flight-to-safety defensive asset positively correlated with stock volatility, it now shows inverse correlation with volatility, a clear signal of de-dollarization. We're not predicting the USD will lose its reserve currency status, but it is clearly changing at the margins. Meanwhile, Bitcoin pivoted to BULLISH momentum last week while U.S. equities remain BEARISH—early evidence that even if stocks retest lows, BTC may not follow, suggesting potential decoupling from U.S. risk assets.

TLDR: Bitcoin's outperformance versus U.S. equities since March supports its emerging safe-haven attributes as capital flight continues.

Left-Tail Risks Emerge as Consensus Ignores Reality

We are increasingly cautious of left-tail risks emerging in U.S. stocks and credit, evidenced by the growing disconnect between consensus GDP estimates and the economic slowdown we will likely see. According to the Budget Lab at Yale, tariffs are expected to carve 1.5 percentage points from real GDP growth through Q2 2026 and 0.6 percentage points thereafter, while reducing median household income by 3.4%—yet consensus still projects approximately 1% real growth with a Q2 acceleration. Recent bond-market volatility broke President Trump's ability to bully our trade partners and has forced him to walk back commentary on trade negotiations, China, and Powell remarks, as we suspect he realized the U.S. doesn't have as much leverage as he originally thought. This policy contradiction is clear: maintaining an equity bull market requires expanding liquidity, yet stemming capital flight demands tighter monetary policy—these are irreconcilable goals. Bitcoin may remain insulated from the equity market's coming challenges as it continues to outperform and de-correlate from U.S. asset performance, alongside gold which remains BULLISH, spotlighting a decisive shift toward hard-asset leadership.

TLDR: Bitcoin and gold's momentum surge signals the market's growing preference for hard assets over traditional risk assets amid policy uncertainty.

With Bitcoin's direction hinging mostly on policy decisions from the Trump Admin and Fed, let's take a look at what's going on on-chain and underneath the hood so we can better position amid the uncertainty: