Bitcoin Rallies While Stocks Stumble: Is The Correlation Decoupling Finally Here?

Tony "The Bull" Severino

1 year ago

3 mins read

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Bitcoin price has rallied more than $300 intraday, meanwhile, the S&P 500 has fallen almost ten basis points in the same time period. Is this the fabled stock market crypto “decoupling” that analysts claimed was coming, or is this just an anomaly before a return to the ongoing correlation between the vastly two different markets this year?

Bitcoin Blasts Higher While The S&P 500 Stumbles Lower, What Gives?

The leading cryptocurrency by market cap has had an explosive day. The cryptocurrency began the day bullish late last night after Sunday night’s weekly close.

The relatively neutral finish closed as green as bulls pushed Bitcoin price up higher over the weekend from late Friday lows. As the Monday morning weekday trading sessions began, however, Bitcoin began to really soar.

In a flash, Bitcoin reclaimed $11,500 and made another $300 push higher, topping out thus far at just over $11,800. Continuation above and beyond this point would take Bitcoin price back to the $12,000 range.

What’s also notable about Bitcoin’s intraday performance, is that it is taking place all while the stock market sees a considerable setback.

The coming election and the potential end of a secular bull market hang in the balance of the remainder of the year. 2020 has already been one for the record books, both in terms of the challenges, the year has presented, but also in terms of how tightly the stock market and crypto have been correlated.

This correlation, however, appears to have ended as you can see in the chart below.

S&P 500 Versus Bitcoin 2020 Correlation Chart | Source: BTCUSD on TradingView.com

Crypto And Stock Market Decoupling Afoot? Or Is This Yet Another Correlation Anomaly?

Bitcoin’s latest pump has pushed prices higher, while stocks have fallen, has analysts who called for a decoupling handing out high-fives and cheering about their victory.

But it may be too soon for celebrating, as this isn’t the first time the correlation deviated briefly. In the zoomed-out chart below, there’s no denying how tight the correlation has been throughout the year so far.

S&P 500 Versus Bitcoin 2020 Correlation Chart | Source: SPX on TradingView.com

However, just as clear, are two divergences between the two asset’s price action. Both times, had Bitcoin climbing higher for roughly forty days before stocks followed suit.

Could the current divergence be nothing more than another anomaly in what has otherwise been a nearly exact correlation, or is this the decoupling underway?

Analysts behind the theory believe that Bitcoin fundamentals and network growth will soon send prices higher, regardless of what the stock market or S&P 500 is doing.

Featured image from Deposit Photos, Charts from TradingView.com

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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