The Rise of Bitcoin: A Look at the Crypto Market Amid Wall Street's Bull Run
As the S&P 500 rose to a record high Friday, a bull Market in U.S. equities was set to mark its two-year anniversary. Though enthusiasm has been muddled in the Crypto market for months, the window also shines a light on just how much Bitcoin has gained during that span.
As highlighted in Opening Bell Daily, a financial newsletter, the S&P 500 has climbed more than 60% to around 5,800 points since a bear market in equities petered out two years ago. Over the same period of time, however, Bitcoin’s Price has risen around 220%, up from approximately $20,000 to a current price above $63,000.
The Tech-heavy Nasdaq composite has climbed 78% in the same span, rising from around 10,300 points to 18,350 points, while the Dow Jones Industrial average has meanwhile climbed 43%, rising from 29,300 points to around 42,800 points. Wall Street's bull run over the last two years simply can't compete with Bitcoin.
Comparing Bitcoin and Equities:
- Bitcoin price has risen approximately 220% over two years.
- S&P 500 climbed more than 60% in the same span.
- Nasdaq composite and Dow Jones Industrial average also saw significant gains.
Bitcoin has struggled to reclaim a new peak price for months, but analysts said there were several reasons why the asset has drawn a similar pattern to the major stock index, ranging from macroeconomic factors to products letting traditional investors gain Bitcoin exposure without the hassle of buying and holding Cryptocurrency.
Bitcoin bottomed out at around $14,750 in November 2022, sinking as panic spread surrounding the collapse of prominent Crypto Exchange FTX. Meanwhile, the S&P 500 fell to 3,600 points a month before, as the Federal Reserve raised interest rates at a break-neck pace, prompting fears of high unemployment.
When Bitcoin swelled to $73,000 in March, the S&P 500 was also in record territory. While the index has gone on to notch new all-time highs, Bitcoin has since fallen as low as $54,000. As of this writing, the asset’s price remains 14% below its peak price, trading hands at $63,250.
Future Predictions for Bitcoin:
- Some analysts believe Bitcoin’s price could pop by the end of the year.
- Bitget Research’s Chief Analyst Ryan Lee predicts bitcoin price between $50,000 and $80,000.
Comparable returns between Bitcoin and the S&P 500 over the past two years are partly a product of the Fed’s increased balance sheet since 2008, Amberdata Director of Derivatives Greg Magadini told Decrypt. Representing what the Fed owns and owes, both asset classes have benefited from increased liquidity as that figure has topped $7 trillion, he said.
“Although rates are a bit higher, we can lose sight of what’s happened since the Great Financial Crisis,” he added, pointing to substantial increase in the Fed’s balance sheet from $800 billion.
Brian Rudick, head of research at the market maker GSR, told Decrypt that Bitcoin and the S&P 500’s overlapping bull runs since late 2022 are partly a coincidence. Both asset classes have been impacted by macroeconomic factors, such as the Federal Reserve’s monetary policy, he said. But the increase in equities and Bitcoin’s price haven’t “been exactly caused by the same thing,” he explained.
The Impact of Spot Bitcoin ETFs:
- Spot Bitcoin ETFs have pulled in $18.6 billion since January.
- It has opened up a major avenue for investors to speculate on Bitcoin’s price.
Rudick noted that Bitcoin’s correlation with equities has been historically low, but greater participation from institutional investors has altered that dynamic for the foreseeable future.
“This correlation has been rising,” he said. “As Crypto becomes more and more institutionalized, it will behave much more like other asset classes.”
Looking Forward:
The rise of Bitcoin amid Wall Street's bull run showcases the growing importance of cryptocurrencies in the global financial landscape. With Bitcoin's price spiking over the past two years and new products like spot Bitcoin ETFs attracting billions in Investments, the future looks promising for Digital assets.
As institutional investors continue to enter the Crypto market and the macroeconomic factors driving Bitcoin's Growth align with equities, the correlation between traditional Investments and cryptocurrencies is expected to increase.
Stay tuned as the crypto market and Wall Street's bull run unfold, offering new insights into the evolving dynamics of the financial world.
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