The correlation between bitcoin and the S&P500 reached an all-time high peak this week. Lateral or bearish behaviors in bitcoin would show a unique purchasing opportunity.
There is indecision about a new bear market that establishes new parameters for the bitcoin price or whether the recent visits to the $25,000 zone are just a simple correction.
Taking a look at the ongoing situation with the US market and its stock market ranks may be the best alternative to observe where the digital asset price is about to go in the short and medium-term.
The most prominent reason for this situation is the correlation that the price of bitcoin and the US stock indices share recently approached a new all-time high peak.
The main catalyst appears to be that many big-cap investors labeled a currency like bitcoin as just another risky currency. The crypto-anarchist goals with which Bitcoin got conceived, or the technological improvements around that digital currency, are for secondary features, so the possibility of raising speculations on its price drives them to consolidate purchase or sale decisions.
Thus, step by step, the price of Satoshi Nakamoto’s cryptocurrency walked in parallel with the world economy and adapted to the economic structures of many nations. Recent price behaviors, both for bitcoin, the S&P500, and the Nasdaq, prove this phenomenon.
The trend appeared to be doubtful until early 2020. Bitcoin was rising as a potent currency to consolidate counterinvestments and keep covered against the risk the fiat system tries to combat in the traditional markets.
But, since the decline due to the COVID-19 crisis, in March 2020, neither BTC nor other crypto assets remained safe. Since then, the correlation established to be a parallelism between BTC and the US economy has only increased.
According to the correlation with the Nasdaq, a US stock market that unites various technology entities, Mike Boroughs, founder of the Fortis Digital investment fund, said that five years ago, the people who were into digital assets were people into digital assets.
News to Beat Down Risky Investments
Considering the correlation between BTC and S&P500 shares, it will be helpful to acknowledge what projections could be useful for the US economic system in the short and medium-term to observe where the digital currency’s price could go and how it would behave.
The US 500 Stocks Index hit a 3-month low rate this week. The reason appears to be e the existing fear about the Federal Reserve’s procedures to fight against the crescent inflation.
On the other hand, some advantages could favor the average American but not financial speculators. When interest rates reach new peaks, investors tend to shy away from risky actions and stand their ground, waiting for a safer investment opportunity. Added to this situation is that the inorganic monetary issue in the United States of America could stop.
By: Jenson Nuñez
