The Covid-19 outbreak can prove to be a boon for the Bitcoin (BTC) and cryptocurrency investors. Analysts and crypto research firms are suggesting that amid of COVID-19 crisis, there is a high probability of a bearish market in crypto at a two-year time frame.
A new report has published by the cryptocurrency research firm, Santiment, on the bearish sign of crypto markets. The report indicated that the ongoing downturn in the equity markets, which has caused by coronavirus pandemic, is somewhere setting up a bearish trend for the digital asset space. Meaning, a bearish sign is floating in the cryptocurrency market in the coming two years.
The report has published on a company’s website blog on March 20.
As per the information, Bitcoin’s growth is in correlation with the traditional equity market that intermittently moves from negative to positive.
“With this pandemic, we see very similar movements in tandem as the coronavirus justifiably has investors in virtually every sector in a similar state of cautiousness.”
Indeed, the investors and traders are getting cautious while spending, whether in the traditional market or the virtual digital asset space.
Bitcoin & S&p500 Correlation- A bearish Indicator
Santiment tweeted on its official page about the correlation while showing a chart and explained through a historic Bitcoin statistics. The data shows that when there is a high correlation, and when they are almost together, we can see the significant downturn in the cryptocurrency markets like SP500.
And, the correlation between Bitcoin & S&P500 suggests that the uptrend is approaching in BTC charts because the correlation line has begun to come to 0 (or lower) again. The crypto research firm company has taken out the data of the past five years and while making an analysis mentions that:
“Any subsequent bouncebacks over time are typically foreshadowed by a growing ‘decoupling’ between BTC and the S&P. We should see a clear sign of an impending uptrend when this correlation line is beginning to approach 0 (or lower) again.”Source: Santiment Blog
According to the report, the current market situation is going through a rough phase. However, a backtest has performed by the team and concluded two things based on history.
1) Bitcoin will recover faster than the stock market.
The reason- “Crypto is a new type of economy, one that facilitates the production of digital value designed to be distributed in a pure, peer-to-peer way. These and correlated factors have contributed to swift recovery of the crypto market in the past, and will no doubt do the same again.”
On the other side of the coin, the traditional markets remain overburdened with too many moving parts. So far, the conventional market has proved sluggish and bloated. However, the crypto market is still on its nascent stage where communities are teaching each other, including developers, traders, analysts, speculators, and, last but not least, minors.
2) The declining correlation between Bitcoin & S&P500 will serve as a leading indicator for the crypto-wide bounceback.
The correlation between Bitcoin & S&P500 by Santiment is somewhere coinciding with the investors’ emotions as well. Many investors and crypto bulls are hoping high despite the market downturn.
Baidu & Google updates on Increasing Interest in Bitcoin Search.
The coronavirus outbreak in China has forced people to get in the isolation mode. To utilize the time and make it more lucrative, people have started searching about cryptocurrencies and Bitcoin.
The index of Chinese search engine Baidu has shown a data where almost 183% jump has seen in the searches for “Bitcoin” (BTC) in the past 30 days.
Google search engine index is also showing an upward trend of interest in the searches of Bitcoin and cryptocurrencies. This increasing interest has become visible, especially after the rebounding of the BTC seen in the last week.
The buying of Bitcoin searches has a higher percentage than the selling searches due to the fear of unemployment.
At present, BTC is at $6,185.25 with a total market capitalization of $113,085,218,088, according to CoinMarketCap data. Following the crash, two weeks ago, so far, after the pickup phase, BTC is at the stabilizing position.