The $BTC to $SPX "Correlation"
Many are starting to say that BTC and SPX movements are on in the same. The claims are both true and false.
When the COVID reality hit, all markets reacted the same- A big selloff.
These panic selloffs are a common occurrence that leaves NO market immune. Not even Gold when any significant shock hits the market.
After initial shock, the market shifts from the "luxury" investments such as stock, and tends to go to original sources of wealth, such as gold and silver.
BTC, being at a value of 1/5-1/3 it's all time high at the time, and all the speculative uses and adoption of blockchain throughout major institutions, made this an intriguing play in times where there is great uncertainty in other overvalued luxury picks.
Wall street invested.
From the point of the crash until this point, there is a clear correlation on a day to day basis because BTC is now a portion of wall street portfolios. When there is decrease in portfolio capital exposure to markets, btc is also sold. An increase in exposure, BTC goes up. The key is the percent allocation.
I pointed out a few spots on the BTC vs SPX charts that debunk the correlation and play to a more macro view of what is actually happening.
All the significant rallies in the stock market after the initial bounce from the crash lead to an immediate sideways action in BTC or even a leakage more recently (last arrow). To me, this means that as there is more certainty in the stock market, there is no need for investment into BTC.
I believe we are finally at a tipping point. If stocks go on to make all time highs, you will see BTC fall significantly, and all the calls for 6/7k will be correct. If the stock market tops before ATH, you will see an initial decline of BOTH BTC and SPX, but then BTC will become a greater allocation of portfolios, and will go on and take the spotlight with GOLD and make new ATH, releasing themselves from any remaining correlation.
My position: I am a long term holder of a few currencies. I hold through thick and thin unlike my approach to the stock market.
What makes the most sense to me historically and politically (definitely not economically) is a rise to ATH for the stock market over the coming months until the election. BTC falls until then. Economics finally hit the stock market (fall in GDP, jobs, TGA increase, inflation) and that begins its long descent and 2021 is Bitcoins time to rise.
I hope I am wrong honestly, but as you can see economic landscape has zero bearing on stocks and I cannot see any other reason for it other than the upcoming election. Stay safe as we approach the upcoming months, selling ANY day from here until October is a win in my book. Don't get greedy.
Bottom line-Micro environment= direct correlation. Macro= inverse correlation
When the COVID reality hit, all markets reacted the same- A big selloff.
These panic selloffs are a common occurrence that leaves NO market immune. Not even Gold when any significant shock hits the market.
After initial shock, the market shifts from the "luxury" investments such as stock, and tends to go to original sources of wealth, such as gold and silver.
BTC, being at a value of 1/5-1/3 it's all time high at the time, and all the speculative uses and adoption of blockchain throughout major institutions, made this an intriguing play in times where there is great uncertainty in other overvalued luxury picks.
Wall street invested.
From the point of the crash until this point, there is a clear correlation on a day to day basis because BTC is now a portion of wall street portfolios. When there is decrease in portfolio capital exposure to markets, btc is also sold. An increase in exposure, BTC goes up. The key is the percent allocation.
I pointed out a few spots on the BTC vs SPX charts that debunk the correlation and play to a more macro view of what is actually happening.
All the significant rallies in the stock market after the initial bounce from the crash lead to an immediate sideways action in BTC or even a leakage more recently (last arrow). To me, this means that as there is more certainty in the stock market, there is no need for investment into BTC.
I believe we are finally at a tipping point. If stocks go on to make all time highs, you will see BTC fall significantly, and all the calls for 6/7k will be correct. If the stock market tops before ATH, you will see an initial decline of BOTH BTC and SPX, but then BTC will become a greater allocation of portfolios, and will go on and take the spotlight with GOLD and make new ATH, releasing themselves from any remaining correlation.
My position: I am a long term holder of a few currencies. I hold through thick and thin unlike my approach to the stock market.
What makes the most sense to me historically and politically (definitely not economically) is a rise to ATH for the stock market over the coming months until the election. BTC falls until then. Economics finally hit the stock market (fall in GDP, jobs, TGA increase, inflation) and that begins its long descent and 2021 is Bitcoins time to rise.
I hope I am wrong honestly, but as you can see economic landscape has zero bearing on stocks and I cannot see any other reason for it other than the upcoming election. Stay safe as we approach the upcoming months, selling ANY day from here until October is a win in my book. Don't get greedy.
Bottom line-Micro environment= direct correlation. Macro= inverse correlation
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