Bear Market Sees Bitcoin and S&P 500 Falling in Pace

by James · September 27, 2022

Major stock market indexes fell on September 27, 2022, taking bitcoin down with them.

Bitcoin erased gains made earlier in the day on a slight weakening of the dollar, rising to $20,338.88 early before falling to $18,902.66 by the end of the trading day. Ethereum also fell from a 24-hour high of $1,397.29 to $1,238.84. By 1:45 PM New York Time, most digital assets had gone down.

The S&P 500 ticked to new record lows for 2022, falling 0.5% from its latest intraday high of 3,636 in June 2022. The Dow Jones Industrial Average fell 200 points after rising 400 earlier in the day.

“The fact that we lost support at both 3900, 3800 and certainly came right down to the June lows tells you that the risk environment hasn’t changed much over the last six weeks,” said Art Hogan of B. Riley Financial.

The latest stock market moves round off a five-day losing streak for stocks. The Dow Jones Industrial Average lost over 300 points on September 26, 2022, 20% below its all-time high.

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BTC rallied before the tank with major stocks

Before the latest plunge in late trading on September 27, 2022, bitcoin rose to levels not seen since mid-September. 2022. “Bitcoin stages a remarkable recovery amid a mild reprieve elsewhere on Tuesday, which will no doubt excite a crypto crowd after another rough period. Turmoil elsewhere appears to have lifted Bitcoin, which has largely traded as a high-risk asset, says Craig Erlam from broker Oanda.

UTXO Management cryptoanalyst Dylan LeClair commented that this sign indicated that bitcoin had bottomed out, using the cost basis of long- and short-term holders as a benchmark. The cost base is the price at which the bitcoin was purchased.

“Historically, this has been the appearance of a Bitcoin bottom, with both short-term and long-term owners now underwater on average,” he tweeted 26 September 2022.

But he warned that a significant sell-off could still occur if bitcoin was sold alongside other stocks, which appeared to have happened as the dollar regained its strength later in the day.

“BTC seemed to pick up risk selling again today. Supporters of the ecosystem have been excited to see correlations with risk assets start to break, meaning that the speculative ‘fast money’ crowd may lose its influence in the space,” said Stephane Oullette from FRNT Financial.

Correlation between bitcoin and the stock market high

Cryptocurrencies and stocks have recently tracked each other as central banks wielded anti-inflation machetes. According to Bloomberg data, the correlation between the S&P 500 and bitcoin reached 0.69 today. A correlation coefficient of one implies that the two are in perfect harmony, but 0.69 is among the highest values seen since 2010.

Other macroeconomic factors have also entered the fray recently, causing bitcoin to behave more like the stock market.

Both stocks and crypto took a beating when the inflation numbers for August 2022 were released in September 2022, with bitcoin and ether shedding recently accrued gains to fall 6% and 8% in intraday trading after the announcement. Shares such as Microsoft (MSFT), Google (GOOG) and Apple (AAPL) also saw red.

For Be[In]Crypto’s Latest Bitcoin (BTC) Analysis, click here

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