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Signs that BTC is decoupling supports its ‘safe haven’ status

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Bitcoin (BTC) has started to decouple from the U.S. stock market index S&P 500 according to crypto statistician Willy Woo. 

Predicting this behavior in late September, he asserted that Bitcoin will break ties with traditional markets due to an influx of new users:

“Bitcoin will decouple from traditional markets soon, but driven by its internal adoption s-curve (think startup style growth) rather than changes in perceptions as a hedging instrument by traditional investors.”

Referring to Network Value to Transaction Ratio (NVT), an indicator Woo introduced in 2017, the analyst said that Bitcoin’s NVT price has shown clear price support despite the S&P falling sharply over recent days.

The NVT can be likened to Bitcoin’s P/E (price to earnings) ratio, however since Bitcoin has no earnings in the literal sense, Woo replaced the P/E values with network value (Bitcoin’s market cap) and daily USD on-chain transaction volume.

Two days ago, Bitcoin’s NVT price (price support) crept into new all-time-highs above $11,000.

Bitcoin’s NVT Price hits ATH. Source: Willy Woo

Woo added that the indicators suggest Bitcoin could begin reclaiming its status as a “safe-haven” asset should stocks continue to fall:

“What this test shows is that if stocks crash, Bitcoin powered by its large adoption s-curve, swallowing ever more capital, will present perfectly good safe haven properties.”

On Oct 26, Morgan Creek Digital co-founder Anthony Pompliano claimed “Bitcoin is the ultimate safe haven” and the market is proving it,” adding that Bitcoin “could not be more uncorrelated” with the stock market.

Not everyone agrees that Bitcoin had any decoupling to do: analyst Scott Melker Tweeted in May that stocks and Bitcoin are “not correlated now, and they weren’t correlated before.”

Early last week, crypto investor Chris Dunn suggested a negative correlation between stocks and BTC had started, prompting Woo to reiterate his stance of Bitcoin as a safe alternative to traditional assets:

“Makes sense that BTC will continue to be correlated in short time frame trading; but not in the longer time frames. BTC is a safe haven, just that ‘risk-on’ (meaning it’s very new) is skewing this fact.”

However, some analysts have suggested that an excessive preoccupation with the correlation between BTC and the S&P 500 could be dangerous. Analyst Michaël van de Poppe said that when things get messy, as they did in March this year, “all correlations tend to go towards 1,” adding:

“Since then, gold, silver & Bitcoin have been resilient for any downwards move and showing strength apart from the equity markets. Don’t pin yourself on those correlations.”





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Bitcoin

Bitcoin sheds $2.5K amid warnings of a repeat BTC price dip

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Bitcoin (BTC) fell precipitously on June 25 after a rejection above $35,000 sparked a rout toward familiar support.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Bitcoin heads back towards $30,000

Data from Cointelegraph Markets Pro and TradingView tracked BTC/USD as it shed over $2,500 during trading on Friday.

The pair had hit local highs of $35,400 overnight before abruptly reversing trajectory to fall below $33,000.

For popular trader Crypto Ed, the situation was similar to events last month after BTC/USD first bounced at $30,000 support.

“Current, sluggish PA reminds me of a similar situation a few weeks ago….. I thought we did a 1-5 and started next cycle but after 1 more top, BTC made a deeper correction,” he commented on an accompanying chart.

“Thinking we might get the same here.”

BTC/USD scenario. Source: Crypto Ed/ Twitter

That would place Bitcoin in a position to rechallenge the $20,000 corridor which it briefly broke into several days ago.

As Cointelegraph reported, the mood among many traders remains skewed to the cautious side after BTC/USD failed to reach a $37,000 target before its latest rejection. The possibility of a new lower low is thus far from off the cards.

BTC buy interest remains

Signs of underlying confidence nonetheless remain.

Related: Bulls on parade: Galaxy Digital and Alameda pundits tip market recovery

On Friday, it was again El Salvador and its Bitcoin law in the spotlight after president Nayib Bukele announced that every eligible citizen would receive $30 free in BTC for downloading its wallet.

Institutional bullishness meanwhile came in the form of the Purpose Bitcoin ETF, which continued to add to its assets under management throughout the price dip.

Meanwhile, altcoins were flat, with no single asset managing to break out of established trading zones.