Topic: BTC Coupling-Is BTC just the SP500 with more steps? (Read 220 times)

I understand that it is kinda frustrating that Bitcoin is lumped with other assets which are the dominant force in the general marketplace. We are, of course, expecting that Bitcoin will have its own world like a bubble that will not be affected to the ups and downs of other assets in the market but no it is not behaving that way...and one big reason is that hot money has entered into Bitcoin and there is nothing we can do to stop them to take Bitcoin too...and in fact it was a big dream come true for many when big investors took notice of Bitcoin adding like a stamp of approval to the coin...though in anything there is always that good and the bad sides of things.

This is unrelated but do you (or anyone else) know where I can find charting of BTC Dominance omitting stablecoins? I'm having trouble on TradingView

Yeah but I remember trading Stock options and the premiums being so whack. Used to have to pay 40% for a trade now with crypto leverage its only like .1% of position size. It's a crazy opportunity

damn, this response is kind of eye-opening. I'm going to look into Jamie Dimon on BTC some more. JPMorgan is at the top

In the past, Bitcoin was associated with drugs, hacking, money laundering and unregulated trade, and now it is linked to the activities of technical markets, both of which are a minor and inaccurate concept of Bitcoin.

The similarity between Bitcoin and the stock market is only about 3 months, while digital currencies started more than 10 years ago.

What is the story of these coins? You are almost the only one who repeated these sayings for several weeks, but I did not find anything new regarding this story.

From the beginning Bitcoin was not acting the same as the stockmarket. But now that more and more people just come into bitcoin for investing we can see that they will trade bitcoin like they trade their stocks. If the stockmarket falls, many average people will start to sell everything they have invested. Now that they also invest into bitcoin, they will just sell that too.

first crypto market cap including bitcoin can easily win on the race of marketcap stock. and I heard the news not mimicking but the news with that bitcoin have correlation with traditional stock market https://financefeeds.com/bitcoin-stock-market-correlation-happens-make-money/

It really seems to be that way most probably because capital enter and exit investment markets in general hence the varying levels of correlation. But not because bitcoin and the SP500 is decently correlated today doesn't automatically mean that it will be like this forever. Expect de-correlation when more capital goes into bitcoin from more and more different countries.

BTC had a lot of independent movements, so it's not exactly a mirror of SP500. Also Bitcoin tends to mimic stock market's short-term movements, like a sudden crash in a single day, rather than long-term trends.

It's not a good idea to view Bitcoin as leveraged SP500, no matter how much correlation there is at a given moment, because such assumption is fundamentally wrong and will only lead to bad predictions. Though it doesn't mean that correlation can be dismissed entirely - you can use it for short-term planning, but never fully rely on it. If you want to trade SP500 - trade SP500.

bitcoin is decoupling and moving away from old paradigms of trading. creating its own path

for instance
you cant trade 0.00001000 of a share.
but you can trade that amount of bitcoin.

in stocks if a stock was $200 each. and traders from today onwards could only afford $200 per order. they could only ever buy 1 or more shares. meaning the price stays where it is or goes down when people buy more then 1 share for $200. but they cant buy half or quarter of a stock/share. which means they are stuck/limited in growth potential

bitcoin however even if people could only afford $200.. this year they can buy 0.01btc.. next year they can buy 0.001 year after 0.0001 and the overall price per btc can go up even if the amount per order doesnt.
.. this is where bitcoin decouples from the norms of stocks/shares

this means even small holders without much money can still buy bitcoin and the price can still go up even if amounts are small.

if all orders of both stocks and bitcoin were for $200..
stocks can only go one direction 1stock per order or 2,3,4,5 lowering the price of each stock the more they give.
even if they added more supply of stocks it wont make the price go up

bitcoin however can sell percentages/decimals. it doesnt ned to add more supply. yet the price can go up even if the order amount of fiat spend per order doesnt.
...

bitcoin offers even people with just $10 opportunity to buy bitcoin. shares/stock only offer whatever a whole share/stock is as the min buy in. sometimes not even that, as some portfolio managers only accept buy-ins of large basket allotments of many stocks/shares. meaning the little guys dont get a chance

(robinhood  falsely represented allows percentage buy-ins. but your not actually buying a true ownership stake in the stock/share. your buying robinhoods valuation for them to own/hoard the stock/share and then divvy out any profit or loss of any complete sale amongst many users clubbing together to fill a whole share/stock. )

bitcoin allows you to buy AND OWN small parts, affordably

I think that it will really take a long time until we see its own behavior. The movement that it does is somehow always comparative to the traditional.

Yes, soon it will have its own behavior because of the mechanism and own feature that it has like halving. While the traditional market, don't have that type of feature just like bitcoin. It will be a factor that it will have its own run and behavior in the future.

But, there will always be the comparison no matter what or even it happens.

I think there are 3 major hurdles remaining for Bitcoin in order to decouple from traditional markets for the next leg up.

1) Mtgox coins:  These coins have been hanging over the market's head for quite some time.  Until they've been distributed and we can get a good idea of how many of them will be dumped, many market participants will be on the sidelines.

2) ETH 2.0:  ETH?  Who cares?  Well, with such a massive supply of crypto frozen out of the market that has risen in value so much from the time it was locked away, there will undoubtedly be a lot of profit taking.  Can the overall crypto market survive another massive amount of coins hitting the market?  We'll see.

3) Spot ETF:  With no spot ETF available in the US markets, lots of fund money is sitting on the sidelines waiting to enter.  When they have a secure route to do so, it will likely lead to a lot of fresh money hitting the market.

So basically, we have 2 downside events and 1 upside event likely occurring in the near future that will effect the price of Bitcoin.  If we can survive the first 2, the third one will carry us to the promised land.

The correlation is due to the fact that Wall street and banks entered the market.

Back in the day people had to buy bitcoin or mine it to be able to sell it. Now they can trade with borrowed money and banks moved in, like when we had that strange case of Jamie Dimon criticizing bitcoin and saying that he'd fire anyone who's caught trading bitcoin and then we heard that they set up a bitcoin trading desk in his bank and that his daughter owns bitcoin... When these guys invest they play around with the balance sheets, they take loans and the money they can invest depends on how much the fed allows them to have. It depends on whether people deposit and save up, or spend a lot.

Then we had covid and lockdowns. People weren't spending much because they simply couldn't go to concerts, gyms, they couldn't travel, so they were saving up, scared of possible pandemic. The governments printed money to give out stimulus packages all around the world. Then lockdowns were lifted, suddenly the covid threat wasn't high anymore, so everybody began to spend and that's where inflation hit its all time high, wall street loans skyrocketed in value and they were forced to sell assets to cover them. You know the rest.

Hopefully they are out already and won't have any coins to sell after the next FED meeting. Eventually they will be out and bitcoin will no longer follow indexes.

Thanks for the response! I too think we are looking at something maybe temporary. Excited to see one day when btc has its own behavior, what that would look like

BTC  recently has reached a high correlation with tech-stocks, which are most of SP500 index.
https://www.nytimes.com/2022/05/11/technology/bitcoin-price-crashing-stocks.html

However, I believe you are thinking the wrong way.
BTC is not mimicking anything. This is a temporary behavior, and is much more related to the global macro economic scenario (fed raising taxes and money flowing from stocks and risk assets to US bonds).

BTC is suffering just like most other risk assets, and tech-stocks and sp500 are just risk assets as well.

However, BTC is not deeply related to those assets, and at some point it will most likely have it own behavior and lower correlation.

If BTC is worldwide and stocks aren't easily accessible to everyone in the world, why does BTC mimic major stock benchmarks? Will BTC become big enough to get out of the shadow of American Business? I know the "Decoupling" has always been a big debate. I am curious to what you guys think it will take to happen. I love trading crypto as of lately just seems like a more volatile SP500. I am waiting for the day BTC is stable and digital "property"