- Bitcoin has tracked the stock market, crashing and then recovering in a short period of time.
- After hitting lows of $4,100 just in March, Bitcoin has pushed past $9,000 this week.
- It isn’t clear whether the cryptocurrency will continue to follow the stock market—which has had a worrying start to the month.
Bitcoin has once again pushed past the $9,000 mark, the latest rise in an astonishingly quick recovery since crypto markets were violently shaken in March.
Following the depressing decline of March’s Black Thursday crash, in which Bitcoin lost over 20% of its value in less than a day, the largest cryptocurrency by market cap has been racing back to pre-COVID-crash levels.
It hit $9,440 on Thursday, though quickly fell to $8,800. But today, it once again pushed past $9,000.
That means Bitcoin’s price has hit pre-Black Thursday levels. The weekend before the March 12 crash, the asset was poking slightly above $9,100, data from metrics site CoinMarketCap shows.
Then Black Friday hit, whereupon Bitcoin’s value sunk hand-in-hand with traditional markets—spooked by the coronavirus pandemic and an oil price war—to lows of $4,100 on March 12.
But in the past week alone, Bitcoin’s price has soared—and some investors are feeling bullish before Bitcoin’s halving on May 12, despite its extreme volatility.
In the Bitcoin halving, which takes place approximately every four years—or after the mining of every 210,000 blocks—Bitcoin’ block rewards are cut in half. This time, they’ll be cut from 12.5 BTC to 6.25 BTC.
The feature, hardcoded into Bitcoin’s protocol, is designed to slow inflation and restrict supply. Previous halvings have been associated with a rise in the price of Bitcoin, and many believe that history will repeat.
Will Bitcoin continue to follow the stock market?
Experts used to say Bitcoin was a maverick, indifferent to whatever mainstream finance does. But the Black Thursday crash rubbished that theory because the asset fell with traditional stocks.
Bitcoin’s price has since coupled with the S&P 500—a benchmark index for the US economy—which has rallied since March after the US government pumped trillions into the economy; the measures were designed to kickstart it into action after it was halted by the COVID-19 lockdowns.
It is too soon to conclude that Bitcoin will continue to move with the stock market.
Despite a strong recovery in April, stocks have had a shaky start to May—the Dow Jones fell by 622 points Friday and the S&P 500 by more than 81 points—as markets tried to find their feet during the pandemic. But Bitcoin kept pushing ahead.
In a newsletter released Friday, analyst and Quantum Economics founder Mati Greenspan said that it didn’t make sense to conclude that Bitcoin would fall along with stocks, adding that “encouraging moments of decoupling” could be seen between the cryptocurrency and the S&P 500.
Ahead of the halving, it would be a great time for Bitcoin to be a maverick again.