Is Bitcoin Decoupling From Stocks?
If we learned anything in March, it’s that Bitcoin can be susceptible to selloffs in the broader market. However it’s been bucking that tide recently.
This chart compares BTCUSD with the S&P 500. Notice how it’s advanced since October 12, while SPX has skidded lower over the same period.
This pushed the 10-day correlation down to -0.7. That’s the lowest since late August, but even that moment wasn’t very comparable because stocks were climbing and volatility was calm. The correlation ended simply because BTCUSD paused as the broader market rose. Most other correlation breakdowns historically are similar: BTCUSD fell or stalled as stocks rallied.
The current price action is much less common: BTCUSD is actually going up as SPX goes down.
It follows a potentially bullish supply/demand dynamic. Rising coronavirus cases and a lack of stimulus increase the odds of more central-bank easing. (Just this week the ECB took a dovish turn.) Meanwhile, institutional adoption has accelerated.
BTCUSD continues to consolidate at its highest levels since the bear-market peak in June 2019. Interestingly, the current range closely matches the shooting-star tail from June 26, 2019. (The space between the high and close, shaded on this chart.) Unlike before, BTCUSD is holding this price range and apparently squeezing into a range, with an outside day on Wednesday and an inside candle yesterday.
So far, it seems to indicate the leading crypto is holding up much better than the stock market. This might not remain the case for long, but it is now.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
This chart compares BTCUSD with the S&P 500. Notice how it’s advanced since October 12, while SPX has skidded lower over the same period.
This pushed the 10-day correlation down to -0.7. That’s the lowest since late August, but even that moment wasn’t very comparable because stocks were climbing and volatility was calm. The correlation ended simply because BTCUSD paused as the broader market rose. Most other correlation breakdowns historically are similar: BTCUSD fell or stalled as stocks rallied.
The current price action is much less common: BTCUSD is actually going up as SPX goes down.
It follows a potentially bullish supply/demand dynamic. Rising coronavirus cases and a lack of stimulus increase the odds of more central-bank easing. (Just this week the ECB took a dovish turn.) Meanwhile, institutional adoption has accelerated.
BTCUSD continues to consolidate at its highest levels since the bear-market peak in June 2019. Interestingly, the current range closely matches the shooting-star tail from June 26, 2019. (The space between the high and close, shaded on this chart.) Unlike before, BTCUSD is holding this price range and apparently squeezing into a range, with an outside day on Wednesday and an inside candle yesterday.
So far, it seems to indicate the leading crypto is holding up much better than the stock market. This might not remain the case for long, but it is now.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
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