2025 began on an optimistic front as Bitcoin soared back into the six-figure territory, trading at more than $100,000. Although it has increased by around 8% in the last week, Bitcoin hasn’t managed to surpass its most recent record high of over $108,000 yet.
Conversely, the fact that Bitcoin’s performance differs from that of equities indicates a potential decrease in their connection, fueling optimism for a bullish market trend in 2025 and potential record highs once again.
Weakening Bitcoin-Equity Correlation
Over the past few years, there’s been a significant change in how cryptocurrencies like Bitcoin move in tandem with stock market indices, specifically the S&P 500. Ever since Donald Trump became the 47th U.S. President in November 2024, these two markets have shown a strong connection.
On the other hand, Santiment’s data shows that Bitcoin experienced a significant increase of more than 3% within a day, while the S&P 500 only saw a minor growth of 0.4%.
As an analyst, I’ve noticed a notable shift here – Bitcoin seems to be moving independently from its previous likeness as a high-risk tech stock. For the most part of the last three years, it was often associated with that label. However, what makes this intriguing is that historically, Bitcoin and the broader crypto market have seen their most robust bull runs when they were least correlated with traditional stock markets. This could be a sign of a new phase in Bitcoin’s evolution.
Specialists are indicating that Bitcoin might be on the brink of another significant increase, and reaching around $140,000 within the upcoming months could be a major turning point.
Crypto Market in Later Stages of Bull Cycle?
The separation we’re witnessing aligns with larger market signals implying that the cryptocurrency market may be nearing the latter phases of its ongoing bullish trend, which started back in January 2023.
According to information from CryptoQuant, the price and duration of Bitcoin have experienced significant expansion, fueled by a large amount of new and ongoing investment. Currently, approximately 36% of all Bitcoin transactions are happening within a month’s timeframe, as indicated by the realized market cap (UTXO).
Although it’s currently lower than previous highs, there seems to be an overall decrease in the market trend, suggesting that the peak might occur during either Q1 or Q2 of 2025. In fact, experts anticipate a significant increase in this ratio, possibly up to 2-4 times, before the market becomes too heated, which could potentially initiate the next economic downturn.
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2025-01-07 20:44