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Bitcoin bear market 2022 to continue, previous S&P 500 crashes testify

Bitcoin bear market 2022 to continue, previous S&P 500 crashes testify

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YEREVAN (CoinChapter.com) – The US stock market had another rough week with the S&P 500 down 6.3% since September 19th. However, it is reasonable to assume that the current bear market has not yet bottomed out based on previous crashes. .

Additionally, stock market analysis would shed more light on Bitcoin’s future price action based on its correlation with risk-related assets.

S&P 500 continues to fall, says analyst

Michael Kramer, founder of Mott Capital Management, detailed a number of similarities between the current bear market and past markets such as 1937, 2000 and 2009.

So far, this bear market has given us a reasonably good guide as to what might happen next. Based on these charts, it looks like this recent decline in the S&P 500 is not going to end anytime soon.

commented Kramer, adding a chart to the analysis.

The graph below illustrates the movement of the S&P 500 over the four periods mentioned: 1937, 2000, 2009 and 2022. The graphs are almost identical, which makes future predictions quite believable.

S&P500 during financial crises in 1937, 2000, 2009 and 2022. Source: seekingalpha.com
S&P 500 during financial crises in 1937, 2000, 2009 and 2022. Source: seekingalpha.com

The Mott Capital founder also noted that the decline in the stock market is likely to continue because it has been slower than the rise in bond yields. More specifically, the Fed raised interest rates in an attempt to combat rising inflation and curbed bond prices, causing bond yields to rise.

The total dividend yield of the S&P 500 has risen to 1.79 percent. This is consistent with past low returns seen at previous market peaks such as April 2010, February 2011, January 2018, October 2018 and February 2020. The lower limit of dividend yield goes back to around 2006.

argued Kramer.

In addition, the analyst noted “a huge gap between interest rates and equities.” He noted that the S&P500’s dividend yield is up 28 points since mid-August 2022. At the same time, the 10-year interest rate has risen by more than 110 points over the same period. Currently, the S&P500 bond yield is 189 basis points below the 10-year rate, which is the lowest since 2010.

What about Bitcoin?

Bitcoin has often been viewed as an “inflation hedge” and called “digital gold”. However, the previous months witnessed a consensus between alpha script and venture capital as the money printer stopped. In addition, the evidence to support the claim is increasing, as Bitcoin’s price performance mimics that of stocks, albeit with greater volatility.

Bitcoin Correlation with S&P 500.  Source: TradingView.com
Bitcoin Correlation with S&P 500. Source: TradingView.com

Morgan Stanley analyst Sheena Shah commented in August that widespread adoption as payment is one of Bitcoin’s opportunities to break away from risk assets.

The correlation between bitcoin and stock indices has remained high and will continue to be so unless bitcoin is widely used as a means of payment – ​​which seems unlikely to happen anytime soon.

said the expert.

As Bitcoin’s widespread adoption is just coming, its correlation with the S&P 500 is likely to continue in the coming quarter, potentially pushing the alpha crypto south of its current price of $19,100 on September 27th.

Stay tuned with the crypto world and click here to find out why the community is trying to boycott Binance

As Bitcoin Bear Market 2022 Continues, Past S&P 500 Series Crashes Testify appeared first on CoinChapter.

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