Bitcoin vs. Major US Stock Indexes

Today, I had a brief conversation with someone about cryptocurrencies. I basically asked this person what he thought of Bitcoin, and his response was simply "it's done -- that ship has sailed." It was pretty clear he was not interested in speaking to me about it, which was fine. I thought to myself though, "has the ship really sailed? Is it done?"

Obviously, if you have read any of my blogs, you already know my thoughts on that. No, I do not believe Bitcoin is "done." In fact, the Bitcoin hash rate remains near the all-time high, reached earlier this year. Miners are still providing plenty of computing power to power the network, meaning that security and functionality of Bitcoin remains strong.

It's hard for me to call it "done" when looking at this metric.

Now, onto price. Perhaps the metric that most people would point to as cryptocurrency's failure. True, we are in a bear market. But so are stocks. Here is a visualization, in chart form, of the price of Bitcoin compared to the S&P 500 Index and NASDAQ Composite Index:

As you can see here, I've highlighted the two previous bottoms, where the prices of the three were very close, by percentage comparisons. As time goes on, they seem to be more and more closely correlated. Obviously, stocks are highly-affected by US monetary policy. Despite being decentralized from central banks, ironically cryptocurrencies also take a hit when the Fed becomes hawkish and tightens monetary policy by raising interest rates.

Interestingly, Bitcoin has only topped the S&P and NASDAQ twice, each briefly when it hit the two previous all-time highs in 2021.

As the S&P 500 can be seen as a gauge of sentiment of the biggest American companies and the overall US economy to a degree, Bitcoin can be seen as a gauge of sentiment on the future of cryptocurrencies as a whole. At the moment, as of December 2022, both are down from their previous highs. It seems that all three are once again making their way to another convergence, as seen in December 2019 and February 2020 -- the two previous lows. We are not quite there yet, by the looks of it.

It's impossible to call the bottom of any bear market, so I'm not even going to try. I will say this: Bitcoin is far from being done, and its next bull run should come with the next bull market for US stocks.

As an OG once said, "...as for me, I am HODLING!"