What Does S&P500’s New High Mean for Bitcoin and Cryptocurrencies?
The famous American stock market index, S&P 500, that tracks 500 important companies in the market, was able to reach a new all time high. It registered $2,898.25 dollars on August 27. But what does that mean for Bitcoin and the cryptocurrency market in general?
At the end of the last year, the S&P 500 and bitcoin reached all time highs. However, the SPX was able to register its first ATH on January 26, 2018, when it touched $2,872.87. At the moment, Bitcoin was falling down to $10,000 dollars.
A good question is related to what may happen in the cryptocurrency market now that Bitcoin has passed the $7,000 dollars barrier, which has not been seen since August 7.
Some experts and analyst in the crypto world think that by the end of the year the famous virtual currency will see a strong bull run. Something similar to what happened in 2017.
For example, Changpeng Zhao, Binance founder wrote on twitter that the year is not over and the market may see a new bull run.
The year is not over yet. :) It seems people become geniuses around Sept-Xmas. https://t.co/uEwbzJEcVX
— CZ Binance (@cz_binance) July 31, 2018
In the United States stock market, when 2017 came to an end, investors were searching higher exposure to risk. At that moment, there was a so-called ‘risk-on’ environment afoot. The same happened when Initial Coin Offerings (ICOs) exploded at the end of the last year. Cryptocurrency market capitalization as a whole soared to unexpected and unprecedented levels close to $1 trillion dollars ($800+ billion USD).
However, the crypto market changed direction and became bearish during 2018. The same happened with the S&P 500, that turned bearish this summer. Now, the SPX is moving to the other side.
Back in June, the Forbes contributor Naeem Aslam, suggested that some crypto investors were moving their funds from the crypto space, to traditional markets. But with the latest gains in the SPX, some of the investors that decided to move to it, could return to Bitcoin.
The last week, Tom Lee, Fundstrat co-founder, said that the MSCI Emerging Markets Index, tracking the performance of 24 different emerging markets, was a very important indicator for Bitcoin’s price.
Another analyst, said that Bitcoin has different moments of correlation and divergence with SPX.
It is impossible to predict the future and what will happen with Bitcoin and its relation with the SPX. However, the ‘risk-on’ has important chances to be back on the table.
In the last hours, Bitcoin has grown 5% and most of the virtual currencies are registering important gains as well.