Cryptocurrencies

Correlation between Bitcoin (BTC) and S&P 500 drops 90% as Bitcoin hits new highs for 2020 – Cryptocurrencies

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Bitcoin (BTC) reached its highest value of the year topping $ 13,000, a number not seen since 2019. This performance is closely linked to the announcement made by PayPal allowing its customers to use the cryptocurrencies to make payments from their cards. But as the community rejoices over this double event, it can be seen in the stock market a strong decorrelation between bitcoin and the S&P 500. All these events seem to herald an explosive end of the year for cryptocurrency. Explanations.

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Nothing seems to stop Bitcoin anymore

Still above 57% at the beginning of October, the correlation between BTC and the S&P 500 has only been falling over the past week. With a drop of about 90%, it is now only 6.2% according to statistics from Skew. A situation that further worries traditional investors in search of stimulus measures from the US administration. If an agreement is announced to the House of Representatives, only concrete actions can stimulate the market. At the same time, the correlation of assets with gold remains broadly positive.

Another major fact, the domination of bitcoin in the market took advantage of this to reach new heights which have not been observed since 2017 and the record price of the cryptocurrency. Bitcoin’s perpetual swap volume also hit the highest level of the year, establishing a new record of $ 21.58 billion. The fall of the dollar index on the market has also been interpreted by the analyst Mati Greenspan as proof of the rise of the cryptocurrency market.

An explosive end of the year?

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Historically, the end of the year has often been conducive to the explosion in the value of bitcoin and this pattern seems to want to repeat itself this time around. The price of the cryptocurrency will thus have known a 19% increase in the month of October alone far from the disaster observed in mid-March in the midst of the coronavirus crisis. Even though PayPal’s announcement gave the BTC price a boost, the real market expectations for an increase are for December 2020. With now over 100 days above the $ 10,000 mark this year, bitcoin seems to be taking off.

The fact that the asset has pulled out of its correlation with the S&P 500 Index and the dollar’s correction are grounds for satisfaction that the best is yet to come. While it is imperative to wait for another record at the end of the year, notably the $ 14,000, before being so emphatic, there is no doubt that bitcoin has shifted into high gear.

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