Why Tightening Correlation With S&P 500 Could Be Bullish For Bitcoin
Many people think of Bitcoin as a safe haven asset, but as we near the end of 2020, its correlation with the S&P 500 has been steadily increasing. But before you panic sell your bitcoins, you should consider that this could actually be a good sign for the cryptocurrency’s future.
A Sign of Maturity?
One way to look at Bitcoin’s increasing correlation with the S&P 500 is as a sign that it is maturing as an asset. After all, the S&P 500 is one of the oldest and most established stock indices and its increasing correlation with Bitcoin could be seen as a sign that the cryptocurrency is being taken more seriously by the mainstream financial world.
Increased Demand
Another potential upside of Bitcoin’s close correlation with the S&P 500 is that it could be an indication of increased demand from big institutional investors. After all, many of these investors tend to rely on traditional stocks and indices for their portfolios, so if they are now looking to diversify by investing in Bitcoin, that could lead to an influx of capital which could drive up prices.
Time for a Bull Run?
All in all, there are a few potential upsides to Bitcoin’s increasing correlation with the S&P 500. If big institutional investors are indeed increasing their demand for Bitcoin, then that could lead to a sustained bull run that could be very beneficial for both long-term and short-term Bitcoin investors. So don’t panic; instead, consider that Bitcoin’s increasing connection with the S&P 500 could actually be a good thing.
So there you have it: the potential upside of Bitcoin’s tight correlation with the S&P 500. Who knows — maybe it’s just what we need for a bull run that’ll take us to the moon!
