Bitcoin Rises While the S&P 500 Falls, A Positive Sign for Bitcoin Adoption

Author: Michael R.
Date: 
December 29, 2018
Read time: 
2 minutes

After falling 85% from its all-time high, Bitcoin finally shows resilience. At the beginning of the month, the price of Bitcoin fell to $3,100, with a quick bounce back to ~$4,200.

After falling 85% from its all-time high, Bitcoin finally shows resilience. At the beginning of the month, the price of Bitcoin fell to $3,100, with a quick bounce back to ~$4,200.

If Bitcoin continues to rise while the stock market drops, then one would expect Bitcoin adoption to rise substantially, much like we witnessed in 2017.

The volume at these levels was significant. Some speculate that the reason behind the strong bounce back is due to bitcoin adoption from investors waiting on the sidelines for cheap prices. Considering strong support at the $1,000 level, which was the price before the meteoric rise in 2017, and for those who purchased Bitcoin above $10,000, it is hard to believe that it will go below the $2,000 to $3,000 range. Fortunately, the market seems to be backing up their hopes.

In addition to an attractive price for Bitcoin, another fundamental was at play. The S&P 500, one of the best indicators for stock market performance, acting as an index representing a basket of the top 500 largest US stocks, is dropping in price. The S&P 500 has slumped nearly 20% from its most recent peak.

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There are two takeaways here looking forward. One is that if the S&P 500 continues to crash, investors will look for alternative assets to hedge their portfolio - Bitcoin may be the way to go. The second is that Bitcoin and the stock market do not seem to be directly correlated, while other traditional assets are. If Bitcoin can go down while the stock market goes up, then crypto-assets, in general, are arguably an uncorrelated asset, becoming an economy all on its own. This is attractive to all types of investors. If Bitcoin continues to rise while the stock market drops, then one would expect Bitcoin adoption to rise substantially, much like we witnessed in 2017.

If you want to get a head start on the future and hedge your investments, then come check out our start investing guides - you won’t regret it.

Posted by Michael R.

Michael is an entrepreneur who has been deeply involved in the cryptocurrency industry since early 2014. He joined Cryptomaniaks as a cryptoanalyst, helping to create accurate and digestible content.

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