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Bitcoin Divergence With S&P 500 Signals Big Step Forward
Bitcoin (BTC) and the leader stock market index, S&P 500 Indexhave a historical correlation that has recently been called into question. This divergence suggests that either BTC will make a big move higher or the stock market will reverse its trend to the downside.
In particular, Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence, identified the divergence between both 100-week moving averages (BUT). McGlone shared the discovery in a send ON X on July 2, suggesting that this is a leading indicator.
According to the strategist, the S&P 500 MA is already 23% above its close in the first half of the year. In contrast, Bitcoin’s moving average is 2.4 times below its peak in the first quarter of 2024.
Furthermore, the higher time frame chart validates a downtrend in Bitcoin momentum, also showing divergence. If the historical correlation materializes, we should expect either a decline in the stock market indicator, or a rise in the Bitcoin indicator. McGlone predicts a “reversal” for the second half of this year.
Bitcoin 100-week MA vs. S&P 500 100-week MA. Source: Bloomberg Intelligence
Bitcoin Bearish and Bullish Contexts
As reported by Finbold, Bitcoin is going through a difficult period sell-offs by German governments and the United States. Furthermore, Mt. Gox Announces Redemption of Over $8 Billion in BTCawaited for over a decade.
In this context, Bitcoin miners have begun to capitulate with record-high reserves and hashratesMeanwhile, longtime supporters like Peter Thiel have Lost belief in cryptocurrency’s core value proposition.
However, the BTC price remains within a four-month range, testing support at $60,000, currently trading at $60,100. Cryptocurrency trader and investors continue to predict a bright future for Bitcoin, with projections ranging from $80,000 to $500,000 despite fundamental challenges.
BlackRock (NYSE: BLACK) and more Bitcoin Spot ETFs broadcasters continue to push the first cryptocurrency among traditional financial investors, which should generate medium-term demand. Wall Street has recently sold off significant amountsbut the ETF still show positive monthly capital flows, indicating a bullish prejudice.
Meanwhile, the stock market, as measured by the S&P 500 index, has benefited significantly from the performance of a small number of premium stocks. actions like Nvidia (NASDAQ: NVDA), which caused imbalances.
Therefore, investors should carefully monitor the financial market and use these indicators to gather investment insights and make your own decisions. Caution is warranted, considering the uncertain times with volatility expected to come.
Disclaimer: The content of this site should not be considered investment advice. Investing is speculative. When you invest, your capital is at risk.