The US stock market just reached a historic milestone: close at most weekly levels ever measured. The S&P 500 ended the week at 6,791.68, while the US 100 Index reached 25,358.15, both new all-time highs.
Easing inflation rates, strong corporate earnings and expectations of interest rate cuts from the Federal Reserve have all helped keep investor sentiment optimistic. Amid this record environment, crypto analyst Ash Crypto posted an observation on when the time finally comes to the US stock market.
The record-breaking momentum of the US stock market
The S&P 500’s record climb represents a continuation of the stock market’s steady rise in the second half of the year, which was boosted by the Fed’s rate cut in September, expectations of further rate cuts and confidence in corporate performance.
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The tech-focused US 100 Index led the way, climbing above 25,000 for the first time this week, while large-cap tech stocks posted strong quarterly results. This trend means that the long-running bull trend in traditional markets is intact.
What’s really compelling, however, is the contrast between Wall Street’s record highs and Bitcoin’s relative stagnation. After starting October by breaking to new all-time highs above $126,000, the leading cryptocurrency went into a flash crash that caught many traders by surprise. At the time of writing, Bitcoin consolidates approximately $111,000 despite other asset classes showing strength.
Ash Crypto’s post claims that Bitcoin’s price is artificially held back compared to how stocks have reacted to the same macroeconomic backdrop. If Bitcoin had followed the percentage gains of the S&P 500 or US 100 Index, it could already be trading between $140,000 and $150,000.
When Bitcoin finally catches up
The first wave of liquidity always appears in the stock market when the Fed begins to slow quantitative tightening (QT) or hints at easing. This is because the stock market is where the largest capital pools and institutional participation exist. Equities react first because that is where the credit channels are most established.
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Bitcoin is still outside the traditional financial system and therefore often lags behind this first step. But once excess liquidity starts flowing into other assets, Bitcoin’s price has always risen much faster than stocks. According to Ash Crypto, Bitcoin will soon catch up and earn at least $130,000.
Notably, Bitcoin’s on-chain data is already showing signs of its impending rise. For example, Recent figures show this Available sell-side liquidity (the total amount of Bitcoin sitting on exchanges and ready to be sold) has fallen to just 3.12 million BTC, a seven-year low. Furthermore, data shows that long-term investors have purchased 373,700 BTC in the last 30 days.
At the time of writing, Bitcoin is trading at $111,600.
Featured image from Pixabay, chart from Tradingview.com