Bitcoin (BTC) is waiting for direction as the bear market has finally come to an end. It may still take a long time for the price to recover, but the downtrend seems to be over for now. The S&P 500 (SPX) points to a similar situation in the stock market. Trade war tension between US and China is beginning to alleviate and the market seems ready for a buy back season. That being said, the recent decline in Apple’s stock has sparked a new wave of fear in the market and investors seem more convinced than ever that the market is close to topping out. The stock market has not seen a major decline since the last financial crisis. However, it is quite close to seeing one if things remain the same.
The most likely scenario at this point is that the stock market will begin to rally in the months ahead but it will be a very slow and boring rally. Most investors are likely to flock to cryptocurrencies to ride the waves and interest in traditional stocks, bonds and indices is going to decline. That being said, the S&P 500 is expected to end the year above 3,000 which means there is still plenty of room for growth. With the market turning bullish again, investors will feel more confident buying cryptocurrencies in the months ahead. The S&P 500 points to a rally till mid-2020. This will be the time when we should see interest in Bitcoin (BTC) and other cryptocurrencies at its highest.
Chart for BNC:BLX – Brave New Coin Liquid Index For Bitcoin (1M)
It is interesting to see that Bitcoin (BTC) and the S&P 500 have exhibited a strong correlation at key turning points. However, as the cryptocurrency market matures, we are likely to see that correlation fade away. If the cryptocurrency market crosses a trillion dollars in combined market cap, we are very likely to see it behave as a less dependent market. This means that we could see investors turning to cryptocurrencies in the hopes of making higher returns on investment. As the market matures and big tech giants like Facebook, Google and Apple continue to face problems, we are going to see a shift from centralized markets to decentralized markets. A large number of social media users are not satisfied with how the likes of Google and Facebook use their data. We have seen top executives of both of these companies having to answer tough questions in the last few months.
There is a clear trend that people are ready to move from centralized technology to decentralized technology. If the blockchain industry can come up with an alternative Facebook and an alternative Google that values the privacy of their users as well as entitles them to have their say in the future direction of the service they use, Google and Facebook would die their own death. We do not yet what is going to trigger the next financial crisis but one cannot help but think that these few big tech companies that have become too big to fail have their tentacles deep in the stock market. If something seriously goes wrong with one of them, it could be a strong catalyst to trigger the next downtrend. This is why we need more decentralized projects to replace centralized companies that have enslaved us for years.