Even thoughPraised by some that they did not suffer craters during this crisis, the numbers tell a very different story.
It has often been claimed that Bitcoin tends to follow the mainstream of the U.S. financial markets, particularly the S&P 500. In the past month, this correlation was analyzed with arguments from both sides from all angles. . A slight decoupling is proof that Bitcoin is finally “independent”, only to be tamed again by the wild fluctuations of the S & P 500.
So what is it? When we look at the numbers, as one analyst points out, the truth is that Bitcoin has fared worse than the S&P 500 in the past month and a half.
Comparison of S&P 500 and Bitcoin
Eric Wall (@ercwl), CIO of Arcane Assets, recently released a simple idea that he admitted as probably “unpopular opinion”: Bitcoin did much worse than the S&P 500. Let’s look at the numbers.
From February 24 to March 23, the S & P 500 a dropped 33%. During this time, Bitcoin a 40%. We have seen a recovery in recent weeks, with the S & P 500 also seeing further growth. From March 23 to April 9, the S & P 500 a 26%. Bitcoin won another in the same period 24%.
Wall overlapped the two diagrams to illustrate his point of view.
Current unpopular opinion:
S & P 500 (February 24 – March 23): -33%
BTC (February 24 – March 23): -40%
S & P 500 (March 23 – April 9): + 26%
BTC (March 23 – April 9): + 24%
I am not sure that this is bullish. Not sure if the crash for the S & P 500 is over, and still not sure if the BTC <> S & P 500 is decoupled. pic.twitter.com/1Ow4mVd7os
– Eric Wall (@ercwl) April 9, 2020
The most notable outlier is the Bitcoin crash on March 12, which caused the entire cryptocurrency market to fall 50%. The cascade losses were so severe that even some long-time “owners” panicked when selling.
There is no reason for Wall to assume that the decline of the S & P 500 has ended. Sudden changes and “restores” are common during a downtrend, especially when there is a crisis. There is also no reason to assume that Bitcoin will undock from the S&P 500 if it falls again. When in doubt, history tells us that the cryptocurrency market is likely to continue to decline and Wall is likely to agree.
Judging by these numbers, it’s difficult to argue that Bitcoin has actually decoupled from the S&P 500. At least for the time being, it certainly did not act as a hedge in this crisis. While the S&P 500 has a lot more leeway than Bitcoin, it’s hard to imagine that the leading cryptocurrency won’t break down with it. However, we have to take into account that these are only short-term fluctuations.
Given the problematic macroeconomic indicators, halving Bitcoin may not have an immediate impact on price. In the past, Bitcoin saw the fastest price hikes long after it was halved, not before or even immediately after.
As Bitcoin still appears to be closely linked to the US financial markets, traders would be wise to take note of these macroeconomic trends and plan accordingly.
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