Bitcoin and Stocks Break 2019 Reverse Correlation Trend

At this point, Bitcoin was nowhere near its yearly high above $17,000, which the digital asset hit in January 2018.The S&P saw the bottom of a correctional period around Christmas, which was similar to Bitcoin's market state this time, although Bitcoin saw a big drop earlier - from $6,000 to nearly $3,000 - in November 2018, and did not bounce with exuberance like the S&P.Instead, BTC bottomed out with consolidation and low volatility until April 2019.Bitcoin soars 70% in May 2019 as stocks correctThe S&P was back near its all-time price highs by May 1, 2019.

Bitcoin was in the early stages of its uptrend - a trend that would eventually more than double the digital asset's price.

The inverse correlation between continued into July, with the S&P posting new all-time highs once again around July 26, while Bitcoin was consolidating after its 2019 high near $13,900.

On the whole, since August 2019, the S&P stayed in an upward trend, while Bitcoin has seen an overall downward trend until recently, in what may be the start of a potential bullish reversal.

Is Bitcoin an alternative investment?Since May 1, 2019, Bitcoin and the S&P 500 have been inversely correlated for the most part, particularly when it comes to sizeable moves.

Recently the S&P has hit record levels, coinciding with Bitcoin's historic 42% daily price gain on Oct. 25 and undermining the summer's reverse correlation patterns.

Buyers of Bitcoin often need cash to pay for Bitcoin, which is ultimately affected by politics and traditional markets, leading to a correlation between the two worlds.

"Unpopular opinion, Bitcoin won't make a new high until S&P 500 makes a new high. BTC has been range bound because macro trendless. Confirmed by our Bitcoin Misery Index falling from 66. Since 2009, best years for Bitcoin is when S&P 500 >15%.".

Comparing charts from the S&P and Bitcoin shows compelling - but certainly not conclusive - evidence for the Bitcoin hedge narrative.

As Cointelegraph reported earlier this month, the United States Federal Reserve has added $210 billion to the market over the past two months - an amount greater than Bitcoin's entire market cap of $167 billion - and one that could make deflationary assets such as gold and Bitcoin attractive to investors.