The stock market has been throwing a bit of a wobbly at the moment, the catalyst being inflation fears, but really the fear being interest rate rises.
_What’s this got to do with crypto?_, I hear you ask. Check out this chart: https://imgur.com/7M2gsis
It shows BTC’s historical price on a log scale on the top, and on the bottom is BTC’s correlation coefficient with the S&P500.
What you can clearly see is that in March 2020, we entered a period of the highest correlation in the history of Bitcoin. We like to think that this bull market is driven by the halving, but it’s not. It’s driven by the same thing that the stock market has been driven by, which is cheap debt. Billions have been pumped into the market due to historically easy money.
The sell-off affected Bitcoin quite severely, we’re down around 35% from the peak at the moment, and it was clearly exacerbated by Elon Musk’s Twitter antics. But, there is no reason to assume that this bull market has ended, because the conditions that were in place during the bull run – and that caused the bull run of the stock market too – are still in place. Nothing has changed. There will be no immediate interest rate rises, as the Fed and Treasury have signalled (in fact, there’s too much debt to raise rates, so it’s likely they’ll put it off until it’s impossible to do so, but that’s another story).
This bull market will continue.