Despite its largest asset, Bitcoin (BTC) trading back above $20,000, the cryptocurrency market is still struggling, and its similarities and correlation with the equities market have often been used to draw some important lessons from the past.
One of them is the fact that bear market rallies, or periods when assets increase in value briefly during a broader period of decline, can be very enticing, as the senior research analyst at crypto market intelligence platform Messari Tom Dunleavy said on October 5.
Posting the charts of the past S&P 500 bear market rallies for reference, Dunleavy explained the appeal of such periods – one of which he says we’re in at the moment – especially considering the historical data that shows them “often exceeding 20% in short bursts.”
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Correlation and comparisons with crypto market
Notably, the correlation between crypto and S&P 500 has often been at the center of attention of financial experts. For instance, Mark Mobius, the founder of asset management firm Mobius Capital Partners, has voiced his view that Bitcoin’s decline is bad for the S&P 500, explaining that when Bitcoin goes down, so does the S&P 500.
More recently, in September, crypto trader and analyst Josh Rager used the S&P 500 Index equities movement chart as a reference to indicate that things weren’t “looking so good right now” for Bitcoin, as Finbold reported.
That said, the on-chain and social metrics platform Santiment recently stated that easing of the correlation between crypto and equities, along with the support of the S&P 500 being down -2.4%, was a good sign for crypto as analysts were expecting some Bitcoin momentum.
On top of that, data comparing the 10-year growth of both S&P 500 and Bitcoin has shown that the average prices of the S&P 500 have increased four times, whereas Bitcoin’s advanced as much as 1,000 during the same period, suggesting Bitcoin was a better investment.
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