Bitcoin is transitioning from being bearish to bullish, as emerging and risk markets rally to produce a tailwind for Bitcoin. Fundstrat’s Thomas Lee has been very vocal about his bullish opinions on Bitcoin. On April 12, Lee tweeted and compared Bitcoin’s correlation with emerging markets and the S&P 500. Lee tweeted,
1/ Risk markets globally have rallied YTD big time and this is a tailwind for #bitcoin $BTC. As noted previously, S&P 500 YTD is 2.5 std dev = ~ $14,000 for BTC
It’s curious that Bitcoin correlation is now negative to equities (next tweet)
From @fundstrat_ken latest piece https://t.co/mgolqFqTbv
— Thomas Lee (@fundstrat) April 12, 2019
Lee said that the correlation between Bitcoin and S&P reached the lowest, i.e., -3,2%, while that with Gold hit the highest i.e., 12.6%. The chart attached above shows the correlation of various markets like the S&P 500, Gold, Oil market etc.
The report by Fundstrat elaborated on Bitcoin’s correlation, stating,
“Within major asset classes, Bitcoin is most correlated to Gold with a 90D correlation of 12.6%.In the past week, the largest change in correlation was S&P 500 (-15.7%).”
According to Lee, the disparity between S&P 500 and Bitcoin is with respect to luring investors to invest in Bitcoin, which offers much higher returns when compared to traditional markets. With reference to the Fundstrat report, Lee said that since S&P 500 has been less volatile and since its BTC correlation was turning negative, Bitcoin’s position in the mainstream market seemed to be solidifying. It further explained why institutional investors were showing interest in Bitcoin, he said.
Lee’s conclusion read,
“From page 9 of @fundstrat_ken report, BTC correlation to S&P 500 has turned negative. Couple that with low volatility everywhere and It partially explains why institutions have been buying crypto recently”
In one of his previous tweets, Lee had compared various factors which were acting as tailwinds for Bitcoin, further adding weight to Lee’s opinion about investors jumping ship from markets like the S&P 500 to Bitcoin.
Lee had stated,
“earlier this year, we noted the “macro” factors such as rally in risk assets plus USD no longer surging are tailwinds 4 $BTC #bitcoin”
Moreover, Lee also tweeted about Bitcoin’s Misery Index, according to which, Bitcoin had bottomed as it reached 89, its highest level to-date. He also claimed that the recent pump was the start of a bull rally.
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Source: AMB Crypto