Since the emergence of the coronavirus pandemic, Bitcoin’s price action with the stock market, including the S&P 500 has been highly correlated, however, the end could be near. Bitcoin’s price has crashed in tandem with the stock market, as seen during March when the COVID-19 infections were surging in the United States, as well as the plunge seen last week.
Although the S&P 500 and Bitcoin’s price has been moving in tandem, an on-chain analyst believes that this correlation will soon come to an end. Bitcoin’s price has been trading mostly sideways for the past week and is currently priced at $10,882. Bitcoin was able to maintain its level after its slight surge earlier today.
Last week, on-chain analyst Willy Woo predicted that Bitcoin (BTC) will soon “decouple” from the stock market. He said, “SPX looking very weak, if that plummets, I’ll go out on a limb as say BTC will decouple in coming months. Post halvening and reduced derivative trading volumes fundamentally reduce BTC’s sell pressure against bullish fundamentals of an anti-inflationary hedge.”
Woo explains that if a massive stock market crash were to occur, Bitcoin and the stock market would eventually break its correlation. To back his claims of the decoupling of BTC and the stock market, Woo tweeted:
“If you want to see data behind the upcoming decoupling of BTC from the stock markets powered by BTC’s internal adoption, here’s some glassnode data. This is the active users of BTC after filtering for unique players (ignores multi wallet addresses belong to one entity).”
Additionally, Woo believes that the two markets would soon decouple as Bitcoin’s internal adoption curve would allow it to outpace the traditional markets. He added, “Fundamentals of user adoption have already broken all time highs.”
The former head of sales at Goldman Sachs, and CEO of Real Vision, Raoul Pal, also believes that Bitcoin has more upside potential than the traditional markets. The Wall Street veteran believes that Bitcoin will be the best performing asset in the next two years. According to Pal, Bitcoin was the only asset in the world that has outperformed the growth of the G4 central bank balance sheet. He added:
“Almost no trade matters except Bitcoin as this point.”
Stock futures climbed during overnight trading on Sunday, after a continuous four-week loss on Wall Street. The S&P 500 futures gained 0.3 percent, while Bitcoin has been trading up by 1.5 percent in the past 24 hours. Investors are still on edge regarding the signs of a worsening pandemic, in the US and in Europe.
Image source: Shutterstock