For the second straight day, Bitcoin has risen while stocks have fallen. Is this the beginning of a decoupling from traditional markets?
@SmartContracter picked up on this trend yesterday with the words:
“I was very surprised to see this today, but there’s nothing I want more than to see btc break its correlation with stocks.”
However, he tweeted again today to say the pattern repeated. In addition, the current market dynamics of a clear demarcation between Bitcoin and the Alts are also rare.
Parallels were drawn with the April Fool’s Day pump of 2019, when Bitcoin rose from $ 3,000 to $ 14,000 over a three-month period.
With that, he predicts that if it continues above $ 12.5,000, the same thing will happen again.
2 days in a row now #btc up and stocks down, shit gets really interesting now,
I also can’t remember the last time BTC was pumped and Alts completely dumped. In fact, I believe it was back when BTC broke 4,000 in April 2019, probably a sign of what will come when $ BTC breaks 12,5,000. pic.twitter.com/ V2lfjnPR9T
– “Benjamin Bluntz” (@SmartContracter), October 20, 2020
Typically, a weak dollar equates to both bitcoin and stock pumping. However, as the Dollar Index (DXY) fell to a 28-month low, stocks have bucked the trend by also falling against the dollar.
Bitcoin is the talk of the town
A strong performance from Bitcoin has resulted in an 8% increase over the past week. Currently, the price of BTC is $ 12.3 thousand, which is close to the stiff overhead resistance at $ 12.5 thousand.
Source: BTCUSDT on TradingView.com
What is particularly interesting, however, is how stocks perform over the same period.
While it’s too early to call, the fabled decoupling from traditional markets may be happening.
Analyst Willy Woo has spoken on this topic in the past. He predicts that a falling stock market will eventually break its correlation with Bitcoin.
After that, Bitcoin will return at higher prices, leaving traditional markets behind.
“The current stock market looks very fragile. If the slump continues, Bitcoin will decouple from the exchange in the next few months. People will be surprised when that happens. Following the halving of Bitcoin and the volume of derivatives trading, the reduction has dramatically eased the selling pressure on Bitcoin against the bullish fundamentals of anti-inflation hedges. ”
A recent tweet from Woo also states that this will happen soon. He argues that mass adoption, and with it decoupling, will come first from HODLers.
However, newbies are drawn in when they see the benefits of holding Bitcoin. The adoption pattern in turn forms an S-curve, similar to the growth in startups.
Bitcoin is set to decouple from traditional markets soon, but more from its internal adoption S-curve (think startup-style growth) than from changes in perception as a hedging tool by traditional investors.
The basics of user adoption have already passed all highs.
– Willy Woo (@woonomic) September 24, 2020
Nobody wants an economic crash, not even Crypto Diehards
Many crypto investors were disillusioned when Bitcoin collapsed along with stocks due to the panic in March this year.
What was intended as a hedge against traditional markets turned out to be highly correlated at the time.
Still, if what Woo is saying is correct, it will soon no longer be the case.
However, based on his comments, Bitcoin’s growth will come at the expense of a deep economic recession.
Maybe it’s inevitable, maybe we’ve come too far to prevent it. But just for fear of the unknown, no one in their right mind wants to see an economic collapse.