According to Tuur Demeester, founder of Adamant Capital, a possible decoupling scenario between Bitcoin (BTC) and the Nasdaq Composite can see the price of BTC reach $100,000 in 24 months.
Bitcoin Outperforms Tech Stocks
Demester represented Bitcoin’s rising market valuation against the tech-heavy US stock index, highlighting its ability to break each time after a period of strong consolidation.
“You can do it again in the next 24 months,” he wrote, citing the chart attached below.
Weekly price chart of BTC/USD against Nasdaq Composite. Source: Tuur Demeester, StockCharts.com
The price of BTC has grown from just $0.06 to $69,000 more than a decade after its introduction to the market, according to data tracked by the BraveNewCoin Liquid Index for Bitcoin (BLX).
BTC/USD monthly price chart versus Nasdaq Composite. Source: TradingView
That equated to an increase of around 64.50 million percent in the price of Bitcoin since 2010. By comparison, Nasdaq returns over the same period are as high as nearly 650%, at 20.99 points on Jan 22. June 2020 to 171.54 on February 18, 2022. As a result, Bitcoin’s market capitalization has grown to $755 billion compared to $28.68 billion on Nasdaq.
Will Bitcoin delink from tech stocks again?
The history of Bitcoin thus far has seen multiple periods of its strong correlation with US tech stocks. For example, earlier this month, the cryptocurrency’s correlation efficiency with Nasdaq reached 0.73, almost close to from its five-year high of 0.74 in 2020, according to Bloomberg data.
Bitcoin and tech stock price performance since then. September 2017. Source: Bloomberg
The price per BTC token fell from its all-time high of $69,000 to below $33,000 last month amid a sell-off in broader risk markets. The drop was accompanied by the Federal Reserve’s decision to aggressively raise benchmark rates in the face of rising consumer prices, which hit a four-decade high in January 2022.
Matthew Sigel, head of digital asset research at VanEck Associates, anticipated that Bitcoin would fall along with the Nasdaq and other US stock indices, albeit more severely. However, he points out that Bitcoin’s volatility has trended downward in recent years. By comparison, the Nasdaq 100 has shown more standard deviation moves than its five-year average.
The outlook portrays that Bitcoin has been gradually improving to become a reliable safe haven asset against rising inflation. As a result, its correlation with risky assets such as technology stocks could decrease.
Related: US Inflation Breaks 40-Year Record: Can Bitcoin Serve as a Hedging Asset?
“It’s correlated for now,” James Butterfill, head of research at data analytics firm CoinShares, told Bloomberg, adding that the cryptocurrency is “quite sensitive to fears of rising interest rates.” He noticed:
“But what happens in a situation where you have a policy error, meaning the Fed raises too aggressively, for example, or doesn’t raise aggressively enough, and there’s an inflation problem? That would actually probably support much more to Bitcoin and less favorable to stocks.”
Additionally, Joey Krug, CEO of Pantera Capital, a cryptocurrency-focused hedge fund, anticipates decoupling to occur in the “coming weeks,” noting that “cryptocurrencies will start to trade on their own.”
That $100K BTC Price Target
Demeester cited Bitcoin’s ability to consolidate around $50,000 despite reeling under pressure from its correlation with Nasdaq as one of the main reasons it could embark on a rally towards $100,000.
— Tuur Demeester (@TuurDemeester) February 19, 2022
The price target was in line with what Goldman Sachs anticipated in early 2022. The investment giant, which manages $1.2 trillion worth of assets globally, noted that Bitcoin could hit $100,000 if it takes a cut. of the market share of gold, a traditional safe haven asset. Today, the market capitalization of Bitcoin is just under 6% of that of gold.
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This post Can Bitcoin Break Out Against Tech Stocks Again? Nasdaq Decoupling Paints $100K Target
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