Bitcoin (BTC) posts its biggest weekly rise since October as the S&P 500 surpasses the 5,000 mark

Bulls appear to dominate the supposedly risky corners of the financial market.

Bitcoin (BTC), the leading cryptocurrency by market value, rose nearly 13.5% to $48,300 in the seven days ended Feb. 12, its biggest one-week gain since October, according to CoinDesk data. At the same time, the CoinDesk 20 Index, a measure of the largest cryptocurrencies, rose 11%.

The rally came as continued inflows into US-based spot Bitcoin exchange-traded funds (ETFs) likely overshadowed reports of bankrupt crypto lender Genesis receiving approval to liquidate its Bitcoin holdings of 1.6 billion US dollars. On Thursday, spot ETFs recorded inflows of over $400 million, marking their best day in nearly a month.

The S&P 500, Wall Street's benchmark stock index, rose for a fifth week, closing above $5,000 for the first time on record.

According to Greg Magadini, Director of Derivatives at Amberdata, the boom in artificial intelligence-related stocks has pushed the index higher and the bullish momentum bodes well for the crypto market.

“It's hard to say that AI is overrated. We are truly at the beginning of the AI ​​story and an explosion in adoption. How do you assess the future of AI? In my opinion she is definitely unknown. “Crypto is in a similar situation.” [It is] Given the decentralized on-chain data assets and unknown future use cases, this is likely a compliment to AI technology,” Magadini said in an email.

“This risk appetite for technology by investors is good for crypto and vice versa,” Magadini added.

Shares of NVIDIA, already up over 40% this year, are leading the AI-driven stock rally. Some observers say stocks look expensive as the S&P 500's equity risk premium has fallen to its lowest level since at least 2003.

The equity risk premium compares projected annual corporate earnings growth with the yield on the 10-year U.S. Treasury note, or the so-called risk-free rate, to measure the relative attractiveness of stocks.

The sharp decline in the risk premium means that stocks are expensive and government bonds are cheap. This does not necessarily mean risk aversion, which leads to an outflow from stocks and cryptocurrencies into bonds.

“Using this metric we can see that stocks are expensive (or government bonds are cheap). One can also interpret this to mean that risk appetite in the market is very strong,” noted Magadini.

Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers