Throughout the year, Bitcoin saw a huge correlation to S&P 500 and Gold. Most recently, Bitcoin’s correlation with traditional markets significantly increased last week when the latter took a plunge. This was followed by a massive slump of Bitcoin and the rest of the crypto market. However, Bitcoin could be gearing up for a reversal in this trend now.
According to the popular analyst Willy Woo, Bitcoin may soon decouple from the stock markets. In his tweet, Woo mentioned that this decoupling would be driven by its “internal adoption” and will eventually follow “s-curve” just how a startup grows, rather than traders and investors changing their perception about the asset has a hedge against inflation or against the unknown.
By ” internal adoption”, Woo meant long term organic growth of Bitcoin holders as opposed to hedge funds and whale traders moving capital in and out of BTC as they trade and hedge positions.
If you want to see data behind the upcoming decoupling of BTC from the stock markets powered by BTC's internal adoption, here's some @glassnode data. This is the active users of BTC after filtering for unique players (ignores multi wallet addresses belong to one entity). https://t.co/FvGWUUlSc8 pic.twitter.com/gEweb9vYOY
— Willy Woo (@woonomic) September 26, 2020
The above Glassnode chart referred by Woo noted that the number of active users on the Bitcoin network has sat at the historically highest level. This essentially implied that the broadening market participants which could eventually drive the coin’s price up.
To top that, Bitcoin’s hash rate also reached an all-time high of 150.9319 exa hash per second on the 14th of September. The miners have remained unfazed despite several pullbacks as the metric was still circling its highest value. At the time of writing, it stood at 145.8121 exa hash per second further suggesting that miners are as confident in the profitability of mining, and hence are dedicated to increasing network security.
Bitcoin’s mining difficulty was also adjusted to an ATH thus making the network more secure against attacks. The growth of these metrics underscored the bullish outlook for Bitcoin’s macro price action.
Additionally, the one-month realized correlation spread between Bitcoin and Gold has also dropped significantly to 23.33% over the past couple of days. The monthly correlation figures had recently surged to an ATH of a whopping 75% on the 19th of September. This further reinstated the popular notion of Bitcoin being a “non-correlated asset” making the asset more attractive for investors looking to hedge during times of uncertainty in the traditional market space.