Bitcoin rises above $61,000 amid S&P 500 rally
Bitcoin's (CRYPTO:BTC) price has surged back above $61,000 following a strong performance by the S&P 500, which recently hit a new all-time high.
Market sentiment is currently focused on the upcoming Federal Open Market Committee (FOMC) meeting, where a significant interest rate cut is anticipated.
This event could introduce volatility in both the US stock market and the cryptocurrency sector.
The S&P 500 index, valued at $45.84 trillion as of June 2024, reached a new peak of 5,670 just before the FOMC meeting.
Market participants are speculating on a 0.50% interest rate cut, which historically has led to short-term declines in the index.
Data since 1984 shows that after a rate cut, the S&P 500’s return on investment has been negative 60% of the time within a month.
Similar corrections occurred after rate cuts in 2019 and 2020.
Bitcoin and the S&P 500 currently exhibit a strong correlation, with a coefficient of 0.88.
This close relationship suggests that if the S&P 500 experiences a dip following the anticipated rate cut, Bitcoin could follow a similar downward trend.
A potential correction for Bitcoin could target the $54,000 range, where a CME futures gap was formed earlier this month.
A more significant pullback could even bring the price down to $48,880, particularly if a major macroeconomic shift takes place.
Despite the possibility of short-term volatility, there is a positive outlook for Bitcoin in the longer term.
Historically, the S&P 500 has shown gains over three-, six-, and twelve-month periods, provided the economy does not enter a recession.
Data from Franklin Templeton indicates that the risk of a recession remains relatively low compared to earlier this year, suggesting the US economy is on a recovery path.
If the economy avoids a recession, the S&P 500 could continue its upward trend, potentially benefiting Bitcoin and other risk-on assets in the fourth quarter of 2024.
At the time of reporting, the Bitcoin (BTC) price was $60,518.09.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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