3 Bitcoin price metrics suggest the September 9 10% pump marked the bottom of the final cycle

Is BTC finally down? The data suggests the bears may be losing their grip on the market.

Market analysis

The correlation between Bitcoin (BTC) and stock markets has been unusually high since mid-March, meaning both asset classes exhibited nearly identical directional movement. This data could explain why the 10% rally above $21,000 is dismissed by most traders, especially as S&P 500 futures have gained 4% in two days. However, Bitcoin trading activity and the derivatives market strongly support recent gains.

Intriguingly, the current Bitcoin rally came a day after the White House Office of Science and Technology Policy released a report investigating the energy consumption associated with digital assets. The study recommended the application of energy reliability and efficiency standards. He also suggested that federal agencies provide technical assistance and initiate a collaborative process with industry.

Bitcoin/USD (orange, left) vs S&P 500 futures contracts (blue). Source: TradingView

Notice how the peaks and troughs on both charts tend to coincide, but the correlation changes as investor perceptions and risk assessments change over time time. For example, between May 2021 and July 2021, the correlation was reversed for most of the period. Overall, the stock market saw steady gains while crypto markets crashed.

Most importantly, the chart above shows that a huge gap opened up between Bitcoin and the stock market as stocks rallied from mid-July to mid-August. A comparison using the same scale would be better, but that doesn't work due to the difference in volatility. Nevertheless, it is reasonable to conclude that historically these gaps tend to close.

S&P 500 futures are down 18% in 2022 through September 6, while Bitcoin is down 60.5% over the same period. It is therefore logical to assume that if investors ...