Let’s talk about crypto.

It’s been a minute, but crypto is back on my radar—and not just because prices are bouncing. It’s showing relative strength while other risk assets struggle.

Bitcoin (BTC) is up 1.8% over the past 24 hours. Ethereum (ETH) has gained 2.6%. Several leading altcoins are up even more:

• Zcash (ZEC): +7%
  

• NEAR Protocol (NEAR): +9%
  

• Ethena (ENA): +13%

Crypto is hyper-volatile. Big moves are the norm. So, a strong day by itself doesn’t mean much. What has my attention is crypto’s relative strength… 

Last week, the Invesco QQQ Trust (QQQ) fell 5.5%, wiping out about a month of gains.

Artificial intelligence stocks were hit harder. The VanEck Semiconductor ETF (SMH) dropped roughly 10.5% after falling about 4% the week before.

Crypto held up much better. The iShares Bitcoin Trust ETF (IBIT) barely dipped. More important, it continued to build out a gorgeous base last week. It’s now starting to climb out of this consolidation pattern. 

This tells us that sellers never gained control over bitcoin like they did tech and semiconductor stocks. It suggests that bitcoin could lead a market recovery. 

But don’t just take my word for it. Seeing is believing. This chart below compares the performance of IBIT with the QQQs. When this ratio is rising, it means bitcoin is outperforming.

Not only is it climbing, but it also appears to be on the verge of a big breakout. 

But wait a minute…

Crypto is a hyper high-beta asset. It’s supposed to track the performance of tech stocks. 

For much of bitcoin’s history, that’s been true. But it decoupled recently. In fact, bitcoin is coming off its own bear market.

It fell 54% between last October and this June. During that same stretch, the QQQs rallied nearly 18%. 

In short, bitcoin is moving on its own schedule. And all signs point toward crypto emerging as a source of new leadership.

So, consider picking up some crypto if you’re looking to put cash to work. Remember, it’s a hyper-volatile asset class, so don’t invest more than you can afford to lose.

Justin Spittler Director of Trading, RiskHedge