Cryptocurrency analysis firm Santiment has released a compelling assessment of the recent Bitcoin price decline. The firm highlighted the historical correlation between Bitcoin and the S&P 500 index and said the current divergence may indicate “oversold” territory.
In his report, Santiment reminded that starting in early 2022, Bitcoin and the S&P 500 are similarly affected by global monetary policy and geopolitical developments.
“Bitcoin and the S&P 500 typically move in the same direction when investor sentiment shifts towards risk-on assets. When stock prices show resilience, this indicates continued risk appetite, which often carries over to cryptocurrencies.”
Santiment said that while the S&P 500 index was down only 1.6% last week, Bitcoin fell 12.2% and is approaching the $100,000 level, indicating that the crypto market is under extreme selling pressure.
“Excessive volatility in crypto markets often causes a ‘rubber band’ effect. After panic selling by investors, a strong rebound can occur when selling pressure subsides.”
Santiment also argued that the fact that stocks and even gold are maintaining their price levels is a positive sign for patient crypto investors.
“If the S&P 500 stabilizes or rebounds, Bitcoin’s sell-off could provide further upside potential. This divergence is not a structural weakness, but rather an opportunity for patient investors.”
*This is not investment advice.
