Bitcoin (BTC) and the primary stock market gauge, S&P 500, have traditionally moved in tandem, but this relationship has recently seen a shift. This disparity suggests that either BTC is poised for a significant surge or the stock market is on the brink of a downturn.
A notable observation came from Mike McGlone, the Senior Commodity Strategist at Bloomberg Intelligence, who highlighted the contrast between their respective 100-week moving averages (MA). Sharing his findings on X in a tweet on July 2, McGlone intimated that this delineation could serve as an indication of things to come.
McGlone noted that the S&P 500’s MA presently sits 23% higher than its level in the first half of the year, while Bitcoin’s moving average is a mere 2.4 times lower than its peak in the first quarter of 2024.
Beyond this, a broader timeframe chart confirms a downtrend for Bitcoin’s momentum and accentuates the divergence. Should history repeat itself, the stock market indicator might dip, or Bitcoin’s gauge could see an uptick. McGlone foresees a “correction” in the latter half of this year.
Bitcoin’s Pessimistic and Optimistic Scenarios
According to reports by Finbold, Bitcoin finds itself in a challenging position amidst government sell-offs in Germany and the United States. Additionally, Mt. Gox has finally announced the repayment of over $8 billion in BTC, a resolution long-awaited over the past decade.
During this period, Bitcoin miners have started capitulating, resulting in record-low reserves and hash rates. Noteworthy figures like Peter Thiel have also begun to waver in their belief in the cryptocurrency’s fundamental worth.
Yet, despite these challenges, the price of BTC remains within a four-month range, testing the $60,000 support level and currently trading at $60,100. Despite the fundamental headwinds, crypto traders and investors still hold optimistic outlooks for Bitcoin, with projections spanning from $80,000 to $500,000.
Major Bitcoin spot ETF issuers, including BlackRock (NYSE: BLK), are continually promoting the pioneering cryptocurrency to traditional finance investors, which is anticipated to drive mid-term demand. While Wall Street has recently offloaded substantial shares, ETFs still exhibit positive monthly inflows, indicating an optimistic stance.
Conversely, the stock market, as gauged by the S&P 500, has greatly benefited from the stellar performance of select premium stocks like Nvidia (NASDAQ: NVDA), consequently leading to imbalances.
Hence, it is crucial for investors to closely monitor the financial landscape and leverage these cues to glean investment insights and guide their decision-making. Prudence is advised, given the forecasted turbulence in the times ahead.
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