Bitcoin Breakout = Correlation Break
Bitcoin has had one frustrating correlation. Since 2018 but more so since March 2020 when Covid 19 began, Bitcoin has held a strong correlation to the NASDAQ and SPX. If Bitcoin does truly break out from that correlation, it will be the HODL (hold on for dear life) wave that does it! The HODLing of Bitcoin began with individuals who believed in the strength and security of the network, it grew to bring in some Hedge Fund Managers, then it brought in Institutional Investors. Here’s our favorite global macro analyst again:
“Any small market cap thing has a better chance of breaking out and being uncorrelated to the upside or downside. Bitcoin, being pretty small, can potentially break out even if stimulus remains muted, if enough corporate demand or institutional money wants to get a sliver into it.” Lyn Alden
It is quite incredible what Bitcoin has accomplished since January 2009 when the genesis block was released. It went from $0.008 to right now, $11,328 per Bitcoin. The global macro impact of the Covid 19 lockdowns is being felt worldwide. It has been a catalyst for Bitcoin adoption from CEO’s, Hedge Fund Managers, and Institutional Investors.
“Over the long run since its launch, increasing user adoption, ever-strengthening security and the widening network effect have propelled bitcoin’s market capitalization to greater and greater heights. Those are the long-term variables.” Lyn Alden
Here is another great quote about this:
“Now, Bessemer Ventures, which counts cloud communications platform Twilio TWLO 0.0%, image board Pinterest, professional network LinkedIn, and streaming site Twitch among its previous investments, has said it "strongly" believes bitcoin will become "a globally accepted asset class"—and predicted institutional demand for bitcoin "has hit an inflection point." Bessemer Ventures from Forbes article
Therefore, it stands to reason that the moment when Bitcoin breaks out of its correlation with NASDAQ and SPX will be the moment the Bitcoin breakout is confirmed overall. It has been consolidating for two years plus. 1,133 days from the December 2017 ATH (all time high) is a significant date to watch out for, here’s why:
Bitcoin is under 100 days short of the exact same 1,133 days since the last Bitcoin high. The previous bull cycle was close to this time frame. Will Bitcoin break $20,000 in December 2020 or January 2021? The chart below looks similar to another chart from an earlier blog this week. The long-term patterns for Bitcoin are similar and predictable. We look to January 2021, but nobody knows specific dates for the all-time high.
Once the all-time high is broken, that is when the true FOMO frenzy will begin. Look for the uptrend to steepen considerably next year. Neutral ATM is here to get everyone off of zero Bitcoin.
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