Summary:
Bitcoin has surged 220% over the last two years, vastly outperforming the S&P 500's 60% increase.
Bitcoin's price currently sits at $63,250, 14% below its peak of $73,000.
Analysts predict Bitcoin could reach between $50,000 and $80,000 by year-end due to political factors.
The launch of spot Bitcoin ETFs has significantly influenced Bitcoin's market dynamics, bringing in $18.6 billion.
Increased institutional investment is changing Bitcoin's correlation with traditional equities.
As the S&P 500 reached a record high, marking its two-year bull market anniversary, it’s crucial to compare this momentum with Bitcoin’s staggering performance. While the S&P 500 has climbed 60% to around 5,800 points, Bitcoin has soared 220%, jumping from approximately $20,000 to over $63,000.
The Nasdaq composite has also performed well, rising 78%, while the Dow Jones Industrial Average increased by 43%. However, these figures pale in comparison to Bitcoin’s massive gains.
Despite Bitcoin's struggles to reach new peak prices recently, analysts point to various factors that link its performance to major stock indices, including macroeconomic influences and innovative products that allow traditional investors to gain exposure to Bitcoin without directly buying it.
After hitting a low of $14,750 in November 2022, following the FTX exchange collapse, Bitcoin briefly surged to $73,000 in March. Currently, it trades at $63,250, about 14% below its peak.
Some analysts, like Ryan Lee from Bitget Research, speculate that Bitcoin’s price could range between $50,000 and $80,000 by year’s end, influenced by the upcoming U.S. presidential election.
The correlation between Bitcoin and the S&P 500 can be attributed to the Federal Reserve’s balance sheet expansion, which has reached over $7 trillion since the 2008 financial crisis. This liquidity has benefitted both asset classes.
Experts like Brian Rudick from GSR suggest that while both Bitcoin and the S&P 500 have experienced overlapping bull runs, the causes differ. The S&P’s rise is linked to increasing corporate profits, while Bitcoin’s surge is significantly impacted by the launch of spot Bitcoin ETFs, which have attracted $18.6 billion since January.
Historically, Bitcoin’s correlation with equities has been low, but increased institutional participation is shifting this dynamic, causing Bitcoin to behave more like traditional asset classes in the future.
Comments