Wall Street is bullish – nothing compared to Bitcoin

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 daily opening bellSince the stock bear market ended two years ago, the S&P 500 index has risen more than 60% to about 5,800 points, according to the financial newsletter. 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. Ryan Lee, principal analyst at Viget Research, said Friday. decryption Based on expectations related to the US presidential election, it is expected that the price of Bitcoin could range between $50,000 and $80,000.

Greg Magaddini, director of derivatives at Amberdata, said the parity in returns between Bitcoin and the S&P 500 over the past two years is due in part to the Fed's expansion of its balance sheet since 2008. . decryption. When it comes to what the Fed owns and what it owes, both asset classes have benefited from increased liquidity. Exceeds $7 trillionhe said.

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, said: decryption The coinciding bull market for Bitcoin and the S&P 500 since the second half of 2022 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 increased significantly during this period.” [alongside] We can expect future benefits,” 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 raised $18.6 billion, according to CoinGlass. data. “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