Bitcoin Bull Run: Outpacing Wall Street's FrenzyWhile the S&P 500 has rallied 60% over the last two years, Bitcoin has far outpaced that record, posting an even larger gain. The U
Bitcoin Bull Run: Outpacing Wall Street's Frenzy
While the S&P 500 has rallied 60% over the last two years, Bitcoin has far outpaced that record, posting an even larger gain. The U.S. stock markets bull run is nearing its two-year anniversary just as the S&P 500 hit an all-time high on Friday. While the crypto market has been in a slump in recent months, the period also highlights just how much Bitcoin has climbed during that time.
According to financial newsletter The Opening Bell Daily, the S&P 500 has risen more than 60% since the bear market in equities started to fade two years ago, reaching about 5,800 points. However, during the same period, the price of Bitcoin has skyrocketed about 220%, from around $20,000 to over $63,000 today. Meanwhile, the tech-heavy Nasdaq Composite Index climbed 78% from about 10,300 points to 18,350 points, while the Dow Jones Industrial Average climbed 43% from around 29,300 points to 42,800 points during the same timeframe. Wall Streets bull run over the past two years is simply no match to Bitcoins gains.
Even though Bitcoin has struggled to break through new peak price points in recent months, analysts pointed to a number of reasons behind the asset's similar trajectory to the major stock indices, ranging from macroeconomic factors to products allowing traditional investors to gain exposure to Bitcoin without directly holding the cryptocurrency.
In November 2022, Bitcoin plunged to lows of around $14,750 as panic set in following the collapse of prominent crypto exchange FTX. At the same time, the S&P 500 was down to 3,600 points a month ago as the Federal Reserve hiked interest rates at an aggressive pace, sparking worries about high unemployment. When Bitcoin surged to around $73,000 in March, the S&P 500 also hit a record high. Even as the index has continued to make new highs, Bitcoin has since dipped to lows of $54,000. The asset is still down 14% from its peak at the time of writing, trading at $63,250.
However, some analysts believe that Bitcoins price may continue to rise before the end of the year. Bitget Research Chief Analyst Ryan Lee told Decrypt on Friday that the asset may trade between $50,000 and $80,000 based on expectations for the U.S Presidential election.
Amberdata Head of Derivatives Greg Magadini told Decrypt that the comparable returns of Bitcoin and the S&P 500 over the past two years are partly driven by the Fed increasing its balance sheet since 2008. He said that both asset classes represent assets held and owed by the Fed and have both benefited from the increase in liquidity as the number has surpassed $7 trillion. Despite slightly higher interest rates, we may be overlooking what has happened since the financial crisis, he added, pointing to a significant increase in the Feds balance sheet from $800 billion.
Brian Rudick, Head of Research at GSR, told Decrypt that the overlapping bull run of Bitcoin and the S&P 500 since late 2022 is partly a coincidence. He said both asset classes are affected by macroeconomic factors like the Feds monetary policy. But he explained that the stock market rally and Bitcoin price increase are not completely driven by the same thing."
For the S&P, theres been a huge growth in corporate private profits in the U.S. during that period, and the sentiment towards future profits has been quite high, he said. For Bitcoin, theres a very, very specific event thats been very positive and that is the introduction of spot Bitcoin ETFs.
Spot Bitcoin ETFs have attracted $18.6 billion since their launch in January, according to CoinGlass. This has opened a major avenue for investors to speculate on the price of Bitcoin, and Rudick said, Its hard to underestimate how big of an impact its had.
Rudick pointed out that Bitcoins correlation with equities had historically been low, but greater institutional participation would change this dynamic in the foreseeable future. That correlation has been increasing, he said. As crypto becomes more institutionalized, its performance will look more like other asset classes.
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