S&P 500 and Bitcoin, different twins
S&P 500 and Bitcoin, different twins

S&P 500 and Bitcoin, different twins

By George Michael Belardinelli - 27 Sep 2022

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While the price of Bitcoin and the price of the S&P 500 have mostly been correlated in recent years, it is now likely that they will continue to be correlated in hitting bottom as well as restarting.

S&P 500 and Bitcoin: is it time to “Buy the Dip”?

The so-called binge watching looms unchanged among analysts during the bear market: the continuous search for the bottom always prompts a portion of investors to invoke the inflated “Buy the dip,” especially in certain phases, which usually correspond to the beginning of the bear market and the end of the market’s patience. 

Invoking the admonition “Buy the dip” at the beginning of the Bear market is a kind of warning, as one thinks that at that stage the bottom is far away. 

For a time people forget about the mantra until sentiment brings back the fateful phrase, and that is when the market low is often really recorded.

Clearly, the bear market low is not determined by sentiment or at least not entirely. Other things include the fundamentals and the concurrence of data that can highlight it, though the fact remains that beyond the statistical data that can give an indication, certainty remains mostly a pipe dream. 

Trading in the cryptocurrency market is declining quite rapidly, just a little over a year after the start of this bearish phase the calls to “Buy the dip” are returning. 

As is often the case, the bottom will not come when it is hailed, but it shall be discovered only by being alive.

Analysis of the S&P 500 Index

In the last close, the S&P 500 gave its lowest mark by touching $3,655.04, recording its worst result since 2020. 

Analysts had expected a drop, but not that this would be so sudden, let alone in a single session. 

Meanwhile, Bitcoin’s price sees $19,091 and many analysts see the digital gold’s descent far from stopping. 

Some forecasts give Bitcoin at $12,000, but there are some that even point to $8,000, conjuring up a value far away in time. 

In short, once again the S&P 500 and Bitcoin share a common fate. According to some, this is also due to the fact that, being the most important index of the world’s largest stock exchange (Wall Street) the former and the most capitalized cryptocurrency act kind of as the head of the pack by recording the biggest losses in the bear phase and the strongest moves in the bull phase. 

Grayscale Bitcoin Trust is accumulating

While classic finance and crypto continue their bearish trajectory, investment trusts are no exception, particularly those linked to Bitcoin as it is the most capitalized currency.

The Grayscale Bitcoin Trust (OTCMKTS: GBTC ) is the longest-running and one of the most popular Bitcoin (BTC) funds, and it has proven to be no exception by putting out unflattering numbers.

This Bitcoin fund recently hit a record low of 35.18% relative to Bitcoin spot prices this week, and GBTC’s spot discount has been in the red for a whopping 577 days. Essentially it has not matched earnings since 26 February 2021. 

Currently, the pre-market value of the GBTC trust is $11.20 and according to the Securities and Exchange Commission (SEC), there are 643,572 BTC held by the trust which is equivalent to 3.065% of the Bitcoin total supply (21 million units). 

It is widely believed that the fund’s poor performance should be highlighted in the fact that there are many funds on exchanges around the world and that although Grayscale has tried hard to get GBTC accepted as an ETF (exchange-traded fund), it has failed to bring home the result. 

However, the game is not yet over in the wake of the latest rejection by the SEC as Grayscale has sued the Security and Exchange Commission, which will have to answer for its decision. 

Bob Loukas, a well-known American entrepreneur, discussed the GBTC situation:

“The grayscale bitcoin discount has widened the record 35% at the October 2020 discharge point but institutions if in the coming months BTC drops to a lower adolescence level, this [is] a good option. 

They must be willing to hold [the] point at which a redemption option unlocks value. 

Even so, it must be limited to the discount.”

According to Tom Mitchelhill:

“Who thought getting exposure to [bitcoin] via GBTC was a good idea in the first place? 

They are literally selling it at a 36% discount and the market still refuses to touch it.”

“Some of us have talked about needing to see $ 8-12,000 BTC before we can roll back and get a new bull [in progress]. It’s still not there yet. My company has set this target for about a year +. Oh, and the GBTC discount is also a problem.”

George Michael Belardinelli

A former corporate manager at Carifac Spa and later at Veneto Banca Scpa, blogger and Rhumière, over the years he has become passionate about philosophy and the opportunities that innovation and the media make available to us, in particular the metaverse and augmented reality

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