What does the New S&P 500 Low Mean for Bitcoin?

The crypto industry as a whole is a very interesting domain. While some people are touting it as the next best thing after real estate in terms of providing a new option for value storage and long-term investments, others are saying that BTC is inherently speculative and will struggle during periods of economic recession. The US economy has some of the most important metrics to look at because it has been moving in tandem with the crypto market over the crypto winter.

S&P 500 just hit a new monthly low

Both technologically heavy NASDAQ and focused on traditional industries S&P 500 were losing massively contracting by 9.8% and 9.1% respectively during the last two weeks. With inflation hitting record highs during this global recession, many investors are looking at crypto as a haven that could protect their capital from inflation and other economic factors.

This is a story that most devoted crypto enthusiasts want you to believe. The truth is that the historical market indicates that the complete opposite will happen. Cryptocurrencies notoriously follow the same trajectory as the national economy considering that they are mostly traded against USD-pegged Tether and USDC meaning that the position of the US dollar significantly affects the situation in the crypto market.

It is simply impossible to deny that there is a strong correlation between crypto and the national US economy or even the global economy. We can hope for the best, but we should be preparing for the worst.

The US economy will continue recessing

Only blind people are denying that the country is in a strong recession and won’t recover until next year with debt mounting and the geopolitical situation heating up. The nation will have to support spending by borrowing and ramp up inflation by doing so. While BTC is supposed to be the best bet against artificial inflation, the practice shows that BTC is being abandoned by institutionalized investors just as quickly as all other financial instruments in favor of real estate and land.

The worst-case scenario now is that this debacle ends with the crypto industry contracting once more and freezing until the potential recovery somewhere in 2023.

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