Is S&P 500 the Bitcoin Oracle?

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Forbes published an article today that compares bitcoin price movement to the price movements of S&P 500. The author believes that bitcoin price movements are similar to those of the US equities more than 6 years ago.

Last January, bitcoin dropped down below $170 to lose almost 75% of its value in approximately 7 months. Forbes’ author found many similarities between the bearish waves of the NASDAQ composite index in 2002 and the S&P 500 in 2009 with bitcoin price charts in 2015, as shown by the following graph:

The NASDAQ composite printed a high of over 5000 on the 2^nd of March to increase 350% of its low in 2002. Moreover, the S&P 500 is currently 200% from its low printed in 2009. A relatively similar pattern is occurring on bitcoin price charts and at around $280 bitcoin is up 61% from its value two months ago. I agree with the author that bitcoin currently represents an even more promising investment opportunity that it was 16 months ago.

I also agree with the author that bitcoin price shouldn’t be used alone to evaluate bitcoin’s success; merchant adoption, investors’ interests and user adoption are better indicators of bitcoin’s success. On the other hand, a few governments have decided recently to jump onto the bitcoin wagon and regulate the world of cryptocurrencies which reflects bitcoin’s success too. During only the first 2 months of 2015, around $499 million has been invested in various bitcoin start-ups and thousands of jobs has been created.

Bitcoin price has definitely broken out of the bearish wave that has been ruling over the market for over 7 months. Although there are some similarities between the S&P 500 charts and those of bitcoin, increased venture capital, regulations of cryptocurrencies and utility increase can predict that bitcoin is a good investment option at the moment.