On Friday, the U.S. stock bull market marked its second anniversary as the S&P 500 rose to an all-time high. Although crypto market enthusiasm has been turbulent in recent months, this window also sheds light on how much Bitcoin has gained during that period.
As highlighted in the financial newsletter Opening Bell Daily, since the stock bear market subsided two years ago, the S&P 500 index has risen more than 60% to about 5,800 points. However, over the same period, the price of Bitcoin increased by about 220%, from about $20,000 to its current price of over $63,000.
The tech-heavy Nasdaq Composite Index rose 78% during the same period, from about 10,300 points to 18,350 points, while the Dow Jones Industrial Average rose 43%, from 29,300 points to about 42,800 points. The Wall Street bull market of the past two years has been no match for Bitcoin.
Bitcoin has been struggling to claw back to new all-time highs for months, but analysts say the asset’s similar pattern to major stock indexes is due to macroeconomic factors and traditional He said there are several reasons for this, ranging from products that allow investors to gain exposure to Bitcoin without the hassle of purchasing. And owning cryptocurrencies.
Bitcoin bottomed out at around $14,750 in November 2022, falling amid widespread panic over the collapse of prominent cryptocurrency exchange FTX. Meanwhile, the S&P 500 index fell to 3,600 points last month as the Federal Reserve raised interest rates at a breakneck pace, raising concerns about high unemployment.
When Bitcoin rose to $73,000 in March, the S&P 500 index was also at record levels. While the index continues to hit new all-time highs, Bitcoin has since fallen to $54,000. As of this writing, the asset’s price is still 14% below its peak price, trading at $63,250.
Still, some analysts believe Bitcoin’s price could skyrocket by the end of the year. On Friday, BitGet Research Principal Analyst Ryan Lee told Decrypt that Bitcoin’s price could range between $50,000 and $80,000, based on expectations related to the US presidential election. He said there is.
The parity in returns between Bitcoin and the S&P 500 over the past two years is partly a result of the Fed’s balance sheet expansion since 2008, said Greg Magaddini, director of derivatives at Amberdata. said Greg Magadini, director of derivatives at On behalf of what the Fed owns and owes, he said both asset classes have benefited from increased liquidity, which amounts to more than $7 trillion.
He also noted that the Fed’s balance sheet will increase significantly from $800 billion, adding, “Interest rates are rising a little bit, but we may lose sight of what’s happened since the Great Financial Crisis.” said.
Brian Ruddick, head of research at market maker GSR, told Decrypt that the overlap between Bitcoin and the S&P 500 bull run from late 2022 onwards is partially coincidental.
He said both asset classes are influenced by macroeconomic factors such as the Federal Reserve’s monetary policy. However, he explained that the rise in stocks and the rise in the price of Bitcoin are not “driven by exactly the same thing.”
“For S&P, private profits for U.S. companies have significantly outperformed future earnings expectations during this period,” he said. “When it comes to Bitcoin, there was one singular event that was very positive: the launch of the Spot Bitcoin ETF.”
Since its launch in January, the Spot Bitcoin ETF has attracted $18.6 billion, according to data from CoinGlass. “It’s very hard to underestimate how big an impact this has had,” Ruddick said, opening up a huge avenue for investors to speculate on Bitcoin’s price.
Ruddick noted that while the correlation between Bitcoin and stocks is historically low, increased participation from institutional investors has changed the dynamic for the foreseeable future.
“This correlation is increasing,” he says. “As cryptocurrencies become more and more institutionalized, they will begin to behave like other asset classes.”
Edited by Andrew Hayward
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