Bitcoin (BTC) and luxury watch prices, once positively correlated, have decoupled in the third and fourth quarters of 2023. The divergence occurred as optimism around a bitcoin exchange-traded fund (ETF) gained momentum. While the CoinDesk 20, an index of the largest digital assets, was pushed higher by the U.S. SEC’s approval of 11 spot bitcoin ETFs, luxury watch prices declined. Institutional interest in bitcoin, driven by the ETF, was identified as a key factor for the crypto pricing bump. Some analysts attribute the decline in luxury watch prices to tightening monetary policy and reduced speculative trading in luxury assets.
Investors and analysts suggest that the divergence between bitcoin and luxury watches may be linked to the institutional interest in bitcoin, fuelled by the approval of spot bitcoin ETFs. Bitcoin, often referred to as digital gold, is seen as a store of value, which has held up better in comparison to luxury watches over the past year. The decline in luxury watch prices is attributed to factors such as tightening monetary policy and reduced speculative trading in luxury assets. Critics question the utility of watches in the modern era, where smartphones have replaced traditional timekeeping devices.
The divergence in prices between bitcoin and luxury watches highlights the impact of market dynamics, institutional interest, and changing consumer preferences on different asset classes. While bitcoin benefits from its digital and scarce nature, luxury watches face challenges amid shifting market trends and economic conditions.