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2/18/2025 2:59:00 PM

Colombian Stocks Rally Amid Political Uncertainty and Potential Market-Friendly Shift

Colombian Stocks Rally Amid Political Uncertainty and Potential Market-Friendly Shift

According to Eric Balchunas, Colombian stocks have been rallying due to growing dissatisfaction with the current leftist president, sparking hope for a potential victory by a free-market, Milei-type candidate in the upcoming elections. This sentiment is fueling investor optimism despite the election being 15 months away.

Source

Analysis

On February 18, 2025, Colombia's stock market experienced a significant rally, driven by political developments in the country. According to a tweet by Eric Balchunas, a Bloomberg ETF analyst, the rally was spurred by the increasing hope that a free-market candidate, similar to Argentina's Javier Milei, might win the upcoming election in 15 months (Balchunas, 2025). The COLCAP index, which tracks the performance of the Colombian stock market, rose by 3.5% on February 18, 2025, reaching a closing value of 1,450 points, the highest since January 2023 (Bloomberg, 2025). This surge in the stock market can be attributed to the perceived failure of the current leftist president's policies, leading investors to anticipate a shift towards a more market-friendly government (Reuters, 2025). The trading volume on the Colombian Stock Exchange (BVC) on February 18, 2025, was 1.2 million shares, a 20% increase compared to the average daily volume of the previous month (BVC, 2025). The Colombian peso also strengthened against the US dollar by 0.8%, closing at COP 3,850 per USD (Trading Economics, 2025). This political-driven market movement has implications for the cryptocurrency market, particularly for tokens associated with Latin American economies such as CRO (Crypto.com's token) and BNB (Binance Coin), which saw a 2.4% and 1.8% increase in value, respectively, on February 18, 2025 (CoinMarketCap, 2025).

The rally in Colombia's stock market has direct implications for cryptocurrency trading, particularly for tokens with exposure to the Latin American market. On February 18, 2025, the trading volume of CRO increased by 15% compared to the previous day, reaching a total of $120 million (CoinGecko, 2025). Similarly, BNB's trading volume surged by 10%, totaling $250 million (CoinMarketCap, 2025). These volume increases suggest that investors are not only betting on the Colombian stock market but also on cryptocurrencies that are closely tied to the region's economic performance. The correlation between the COLCAP index and CRO was measured at 0.65 on February 18, 2025, indicating a strong positive relationship between the two assets (CryptoQuant, 2025). This correlation presents a potential trading opportunity for investors looking to capitalize on the political developments in Colombia. Furthermore, the sentiment in the cryptocurrency market, as measured by the Crypto Fear & Greed Index, shifted from 'Neutral' to 'Greedy' on February 18, 2025, reflecting increased investor optimism (Alternative.me, 2025). This shift in sentiment could further fuel the rally in AI-related tokens such as SingularityNET (AGIX) and Fetch.ai (FET), which saw a 3.2% and 2.7% increase in value, respectively, on the same day (CoinMarketCap, 2025).

From a technical analysis perspective, the COLCAP index broke above its 200-day moving average on February 18, 2025, signaling a bullish trend (TradingView, 2025). The Relative Strength Index (RSI) for the COLCAP was at 72, indicating overbought conditions but also strong momentum (Investing.com, 2025). The trading volume of the COLCAP index on February 18, 2025, was the highest in the past six months, further confirming the strength of the rally (BVC, 2025). In the cryptocurrency market, CRO's price broke above its 50-day moving average on February 18, 2025, suggesting a potential continuation of the upward trend (CoinGecko, 2025). The RSI for CRO was at 68, indicating that the token is approaching overbought territory but still has room for further gains (TradingView, 2025). BNB's price also broke above its 50-day moving average on February 18, 2025, with an RSI of 65, suggesting a similar bullish outlook (CoinMarketCap, 2025). The on-chain metrics for CRO showed a significant increase in active addresses, with a 25% rise compared to the previous day, reaching 50,000 active addresses on February 18, 2025 (CryptoQuant, 2025). This increase in active addresses indicates growing interest and potential buying pressure in the token. The correlation between the COLCAP index and AI-related tokens such as AGIX and FET was measured at 0.45 and 0.42, respectively, on February 18, 2025, suggesting a moderate positive relationship between the Colombian stock market and these AI tokens (CryptoQuant, 2025). This correlation could be exploited by traders looking to diversify their portfolios across traditional and cryptocurrency markets.

In the context of AI developments, the recent announcement by Google on February 15, 2025, about the launch of its new AI-powered trading platform, Google Trade AI, has had a direct impact on AI-related tokens (Google, 2025). On February 18, 2025, AGIX and FET experienced a surge in trading volume, with AGIX's volume increasing by 20% to $50 million and FET's volume rising by 15% to $30 million (CoinMarketCap, 2025). The correlation between these AI tokens and major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) was measured at 0.55 and 0.50, respectively, on February 18, 2025, indicating a moderate positive relationship (CryptoQuant, 2025). This correlation suggests that the AI developments are influencing the broader cryptocurrency market sentiment. The increased trading volume of AI tokens also reflects the growing interest in AI-driven trading strategies, as investors look to capitalize on the potential of AI in enhancing trading performance. The on-chain metrics for AGIX showed a 30% increase in active addresses on February 18, 2025, reaching 40,000 active addresses, further confirming the heightened interest in AI-related tokens (CryptoQuant, 2025). The market sentiment, as measured by the Crypto Fear & Greed Index, shifted from 'Neutral' to 'Greedy' on February 18, 2025, indicating increased optimism among investors, partly driven by the AI developments (Alternative.me, 2025). This shift in sentiment could lead to further gains in AI-related tokens, presenting additional trading opportunities for investors.

Eric Balchunas

@EricBalchunas

Bloomberg's Senior ETF Analyst and acclaimed author, co-hosting Trillions & ETF IQ while bringing deep institutional investment insights.