The post Bitcoin Could Face Challenges Ahead Amid Correlation with S&P 500 appeared on BitcoinEthereumNews.com.

The relationship between Bitcoin and traditional markets like the S&P 500 and commodities, including gold and copper, suggests challenges ahead.  Two recent charts from Bloomberg’s Senior Commodity Strategist Mike McGlone discuss Bitcoin’s position in the market. The charts suggest that Bitcoin may face challenges going forward, especially in maintaining its status as a high-beta risk asset. Bitcoin’s High Correlation with S&P 500 The first chart shows the highest-ever 60-day correlation between Bitcoin and the S&P 500 during a rising market. Notably, the correlation hit 0.5661, indicating that both assets are aligning strongly. This trend had stalled earlier in the year, per a previous report from The Crypto Basic. Bloomberg Intelligence The renewed correlation suggests that Bitcoin, which some market watchers have viewed as a decentralized and independent asset, is now trading in lockstep with traditional equity markets.  This trend could signal a change in Bitcoin’s behavior. Investors have historically seen BTC as a hedge against traditional financial assets, but its growing correlation with the S&P 500 indicates that it is now behaving more like a high-beta risk asset.  https://x.com/thecryptobasic McGlone noted that this strong correlation may place a burden on Bitcoin’s beta to keep rising. Essentially, this means Bitcoin’s ability to outperform may depend on broader market performance, particularly in the context of economic growth and risk appetite. Additionally, McGlone drew a parallel between Bitcoin and copper, suggesting that both assets face similar issues in terms of their beta performance. Veteran trader Brandt has also confirmed Bitcoin’s bearish consolidation, but he remains optimistic. Meanwhile, copper has seen a trajectory that mirrors Bitcoin’s, indicating that both assets are sensitive to the shifts in economic growth expectations. This suggests Bitcoin may struggle to maintain its upward momentum if economic conditions weaken. Gold Outperforming Bitcoin The second chart points out Bitcoin’s underperformance relative…

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Filed under: News - @ October 23, 2024 7:18 pm