- Bitcoin (BTC) may be approaching its market peak, according to S&P 500 (SPX) correlation analysis.
- Despite this, the MVRV Z-score suggests there is still room for upward movement.
- A renowned analyst has suggested that BTC could be closer to its market top than anticipated, drawing a parallel with the S&P 500.
Discover how Bitcoin’s current market position is being influenced by broader market trends and what it means for future price movements.
BTC Nearing Market Peak, Analysts Suggest
Bitcoin has been hovering between the $60K and $71K price range for the past three months. This prolonged period of consolidation is partly attributed to diminishing hopes for imminent Federal Reserve rate cuts. In this context, an industry analyst has linked Bitcoin’s market cycle top to the performance of the S&P 500 Index (SPX). Crypto expert CryptoCon posited,
‘Have #Bitcoin tops been governed by the stock market all along? 134 weeks exactly from each SPX/stock market top to the next Bitcoin top. This makes our next target date range the week of July 29th this year, very soon… interesting.’
The analyst’s observations reveal that Bitcoin generally reaches its market top several weeks following the SPX hitting a market cycle high. The analyst highlighted that it takes approximately 134 weeks to hit the SPX top from the last BTC market peak.
Correlation vs. Causation
Based on the observed correlation, Bitcoin might hit its cycle top by the end of July 2024. However, it is important to note that a correlation does not imply causation. Therefore, while the SPX may indicate broader market trends, it doesn’t necessarily dictate Bitcoin’s market peak.
Supporting this viewpoint, another user commented,
‘As SPX rises in value, investors look for further down the risk curve for more profit. This is how liquidity shuffles into #BTC and other risk assets’
Despite these insights, a recent COINOTAG report flagged potential stagnation and profit-taking activities among Bitcoin’s long-term holders, suggesting caution.
Potential for BTC to Continue Rising
Despite these cautionary signs, the Market Value to Realized Value (MVRV) Z-score indicates that Bitcoin might still have more room to ascend in value before reaching its market top. The MVRV Z-score effectively filters out short-term noise to assess Bitcoin’s valuation relative to its fair value over the long term. Historically, Bitcoin has reached market tops when this metric entered the pink range (a value of 7 to 9).
Currently, the MVRV Z-score is slightly above 2, suggesting there is still considerable room for growth if historical patterns continue to hold.
Optimism in the Face of Trends
Bitcoin enthusiast and analyst Fred Krueger remains confident that BTC can continue its upward trajectory, particularly when compared against gold prices and gold ETF flows. Krueger noted,
‘Bitcoin has just about doubled in price since the ETF was announced. But it did so off of a market cap of 0.7 Trillion versus 2.6 Trillion for Gold. It also suggests regardless of flows, we could do another 2x just as a “continuation.’
Conclusion
In conclusion, while Bitcoin’s relationship with the SPX suggests it could be nearing its market top, the MVRV Z-score and other indicators imply there may still be room for further growth. Investors should consider both the correlations with traditional markets and independent cryptocurrency metrics when making decisions. Keeping an eye on these indicators will be crucial in navigating the volatile and dynamic landscape of cryptocurrency investments.
