Historically, Bitcoin (BTC) and the primary benchmark of the stock market, S&P 500, have usually moved in sync. However, recent trends show a shift in this correlation. This divergence implies that BTC could be gearing up for a substantial upswing, or conversely, the stock market may be on the verge of a decline.
A significant insight was shared by Mike McGlone, the Senior Commodity Strategist at Bloomberg Intelligence. He brought attention to the contrast between their respective 100-week moving averages (MA). Through a tweet on July 2, McGlone suggested that this difference could be a signal of potential future events.
McGlone pointed out that the S&P 500’s MA currently stands 23% above its level in the first half of the year, while Bitcoin’s moving average is just 2.4 times lower compared to its peak in the first quarter of 2024.
Expanding on this, an analysis of a longer-term chart confirms a downward trend for Bitcoin’s momentum, emphasizing the divergence. If historical patterns recur, the stock market index could decline, or Bitcoin’s metric may witness an increase. McGlone anticipates a “correction” in the latter part of this year.
Pessimistic and Optimistic Scenarios for Bitcoin
According to reports from Finbold, Bitcoin is facing challenges amid government divestments in Germany and the United States. Additionally, Mt. Gox has officially declared the repayment of over $8 billion in BTC, concluding a long-awaited resolution spanning a decade.
Within this timeframe, Bitcoin miners are beginning to capitulate, leading to historically low reserves and hash rates. High-profile individuals like Peter Thiel are showing signs of wavering in their confidence in the fundamental value of the cryptocurrency.
Despite these obstacles, the price of BTC remains within a range of four months, testing the $60,000 support level and presently trading at $60,100. Despite the fundamental challenges, cryptocurrency traders and investors hold positive projections for Bitcoin, ranging from $80,000 to $500,000.
Key issuers of Bitcoin spot ETFs, such as BlackRock (NYSE: BLK), are actively promoting the innovative cryptocurrency to conventional financial investors, predicting an increase in demand in the mid-term. While there has been a recent sell-off by Wall Street entities, ETFs continue to register positive monthly inflows, which suggests an optimistic standpoint.
In contrast, the stock market, as reflected by the S&P 500, has greatly benefited from the exceptional performance of specific premium stocks like Nvidia (NASDAQ: NVDA), resulting in disparities.
Therefore, it is essential for investors to diligently observe the financial landscape and utilize these indicators to gain investment insights and steer their decision-making process. Caution is recommended, considering the anticipated turbulence in the forthcoming period.
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