To The Moon

If we have been following the correlation between Bitcoin (BTC) and the $S&P 500(.SPX)$, we will notice that there have been a drop since 01 August 2024, and currently it is at 0.05 which indicate a market divergence.

Over the past five years, the two have been highly positively correlated during the pandemic period and from the end of 2021 to 2022. At the beginning of 2024, both showed significant increases. However, despite the SPX continuously reaching new highs, BTC has been hovering around $60,000, occasionally falling below this level.

Why Bitcoin Drop While S&P 500 Rise

Since 2019, BTC and SPX have shown negative correlation four times, each time indicating a local low point in Bitcoin prices. This suggests that while the traditional stock market continues to perform strongly, Bitcoin's performance has been more volatile and less predictable. The divergence in the correlation between the two could be an indication of a shift in market dynamics, with Bitcoin potentially becoming less influenced by traditional market movements.

7DMA Daily Transactions On Bitcoin Network Dip But Show Sign of Coming Up

I would think that we should look closely at other indicators for Bitcoin when we are planning to trade Bitcoin.

One of them would be the daily transaction as we can see that it has been dropping over the past few days with a slight increase recently, but is that enough to move Bitcoin price higher?

One of the consideration would be investors are putting money into Bitcoin as diversification of their assets because of interest rate and economic uncertainty.

With the inflation slowing down and rate cut coming up, would Bitcoin still be attractive?

Drop In Number of New Addresses On Bitcoin Network

As mentioned in previous section, we could see that investors might not be coming into Bitcoin as alternative assets, because inflation is slowing down and also rate cut is impending.

So investors could stay in the equities market, as seen from the number of new addresses on the Bitcoin network, we can see that there is a decline recently.

And this trend would still be going down, because new addresses normally would be accounts that is coming to buy Bitcoin.

Summary

I would be expecting Bitcoin to trade range bound between $57,000 to $58,000, for Bitcoin to go above the $58K level, we might need to see some correction happening on the S&P 500.

I do not think we would want to see some correction on the S&P 500, but we can watch the recent tech stocks recovery closely.

Appreciate if you could share your thoughts in the comment section whether you think Bitcoin would continue to trade range bound while S&P 500 make the tech recovery?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.

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