The broader stock market has recently been showing signs of underperformance. According to a recent analysis conducted by Barchart, the market breadth of the S&P 500 has fallen to its lowest level since June 1. Presently, only 43% of the companies listed on the S&P 500 are currently trading above their 200-day moving averages. Moreover, the leading U.S. equity index recently set another bearish record just a few hours ago.
Over the past 103 days, the S&P 500 had not experienced a decline exceeding 1.5%. However, on Thursday, September 22, it closed 1.64% lower, bringing an end to this streak. Nevertheless, Barchart pointed out that the record of not declining more than 2% is still intact. In fact, it has now reached an impressive 147 consecutive days, marking the longest period since February 2018.
Bitcoin’s Battle: Crypto vs. Equities
Bitcoin is currently navigating one of its most severe bear markets. It has experienced a substantial decline, plummeting by over 60% from its record high price of $69,000. Nevertheless, when examining its return distribution, it exhibits similarities to that of large-cap stocks such as Nvidia and Tesla. Given that Bitcoin is traded throughout the year, it is reasonable to anticipate a greater degree of price discovery compared to other assets. However, a recent assessment conducted by Ecoinometrics revealed that Bitcoin does not qualify as a distinct “outlier.” To a considerable extent, its pattern of return on investment (ROI) aligns with that of select prominent stocks. The analysis emphasized this point,
“When you look at the profile of the monthly returns for those three [Bitcoin, Tesla, Nvidia] since 2016, they really don’t look that different… The point is that Bitcoin doesn’t live in a world of its own in terms of volatility and return distribution.”