Over the past three days, the S&P500 crashed 12%, losing 2,797 points. However, Bitcoin price is down only 5.51% and is already recovering. This shift in dynamics between the highly correlated risk-on assets has caused investors to speculate if this a decorrelation or if BTC is lagging. If the former is true, then cryptocurrency markets are likely going to enjoy massive gains in the upcoming days. If the latter comes pass next week, then investors await more pain, potentially crashing the king crypto below $80K.
Let’s explore this potential shift in paradigm between US stock and cryptocurrencies along with Bitcoin price prediction and key levels to watch.
BlackRock’s Decorrelated Asset for Bitcoin Price Comes True as BTC Decouples From S&P500
The below chart clearly shows the disparity between Bitcoin price and S&P500, the two risk-on assets that are being shaped by macroeconomic and Trump’s policies. While S&P500 is down -10.74% since Wednesday, BTC’s value hovers around -3.15%.
Did Bitcoin price decorrelate from the stock markets and behaving as an uncorrelated asset that investors can flock to in times of market turmoils?
A popular crypto analyst, with username fewseethis, noted after recent Bitcoin price crash, “an uncoupling of this magnitude would be quite historic if it holds.”
A popular crypto influencer Pete Rizzo confirmed that the Wall Street is realizing that “ Bitcoin is an uncorrelated asset backed by energy.”
To add credence to this outlook, BlackRock CEO Larry Fink has always considered Bitcoin as an “uncorrelated asset.”
In an interview with CNBC’s Jim Cramer, Larry Fink said,
“Bitcoin is legitimate financial instrument that allows you to have uncorrelated returns.” The CEO also added that BTC is an instrument that you invest in “when you are frightened and countries are debasing their currencies by excess deficit.”
Is Bitcoin Actually Decorrelating From S&P500 and US Stock Market?
While some are optimistic, others are skpetical about this “decoupling.” Collie, another crypto analyst added that this isn’t decorrelation but lag.
“This looks like the most obvious lagging situation. Happy to be wrong and buy higher but glhf to those longing into the weekend”
Dom, a crypto trader posted his observation of Bitcoin price strength against Nasdaq100. While BTC is up 1.8% NDX is down 9.77%.
“Considering the high correlation of these over the last few years, this is surprising The floor fell out on stocks this week, but not on BTC.”
The trader further went on to suggest this weekly divergence has happened six times and over the course of the next three months, Bitcoin price has almost always produced positive gains.
In conclusion, if Bitcoin is decorrelating from the US stock market, this could be a bullish sign that hints at massive gains in the near future. In such a case, investors can expect a sweep of the $80K key psychological level to kickstart a bull run to first critical resistance level at $90K followed by $100K and the ATH at $110K.
However, if BTC is not decoupling but lagging, then a breakdown of $80K and a flip of this key support into a resistance level will be the next bearish signal. Such a development could see Bitcoin price crash down to $70K or $69K support levels.
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