The Case For Bitcoin Decoupling From The Stock Market

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As traders and analysts, we acknowledge the strong correlation between Bitcoin and the S&P 500. How could we not? Prices have experienced a parallel increase since the liquidity crisis in March. Nevertheless, prominent cryptocurrency analyst, Willy Woo, has shared his thoughts on the future decoupling between Bitcoin and the equity market. While we have yet to see this occur, here are some of the arguments which foreshadow a future decoupling:

We’re at the early adopter phase in Western countries

We’re at the early adopter phase in Western countries, some higher inflation countries are now broaching early majority according to this chart from Statista.

(And yes, the high monetary inflation the world is undergoing right now is growth steroids for BTC HODLer adoption.) pic.twitter.com/PH7AHWrSNc

— Willy Woo (@woonomic) September 28, 2020

From the chart above, you can see that countries with higher levels of economic instability flock toward Bitcoin as a currency hedge. Additionally, the world is currently experiencing high monetary inflation which only increases the rate of Bitcoin adoption.

There’s more active on-boarding happening now than at the mania phase of the 2017 bubble

The graphic above illustrates the fundamental bullish case for Bitcoin. At our current point, Bitcoin fundamental adoption is at an all-time high. Willy Woo explains the significance,

Short term moves are controlled by derivatives traders, expect more whipsaw. Has nothing to do with longer term macro, which is born from fundamental long term demand and supply. At a certain point you’re going to get a HODLer investor squeeze on the whipsaw game, and the price teleports upwards to a new technical setup and a new “correlation narrative”.

So this is a double headed market, on one side you have startup investor behaviour (VCs, HODLers) on the other you have high net worth family office types and Wall St operators. The former will force the de-coupling.

As the overall user base continues to create new highs, the amount of hodl support grows and fundamental sell pressure decreases. While traders and whales will move the price in the interim time frames, the fundamental bullish case for Bitcoin continues to grow.