Tuur Demeester founder of Adamant Capital, says that a potential decoupling scenario could see Bitcoin (BTC), and the Nasdaq Composite rise to $100,000 in 24 months.
Bitcoin outperforms tech stocks
Demeester compared Bitcoin’s rising market value to the tech-heavy U.S. Stock Market Index, highlighting its potential to break out every single time it does after a period that has been strong consolidation.
He wrote that “it may do so again in the next 24 months,” citing the attached chart.
BTC/USD vs. Nasdaq Composite Weekly Price Chart. Source: Tuur Demeester, StockCharts.com
According to data from the BraveNewCoin Liquid Index (BLX), Bitcoin’s price has risen from $0.06 to $69,000 over a decade since its introduction to market.
BTC/USD versus Nasdaq Composite monthly prices chart. Source: TradingView
This represents a 64.50million percent increase in Bitcoin’s value since 2010. Comparatively, Nasdaq’s returns over the same period are nearly 650% — from 20.99 on June 22, 2020 to 171.54 as at February 18, 2022. Bitcoin’s market capital has risen to $755 billion, compared to Nasdaq’s $28.68 million.
Is Bitcoin going to decouple again from tech stocks?
In Bitcoin’s history, there have been multiple times when it has shown a strong correlation to U.S. tech stocks. According to data from Bloomberg, this month’s cryptocurrency’s correlation with Nasdaq was 0.73. This is almost at the same level as its 5-year high of 0.74.
Since September 2017, the price performance of bitcoin and tech stocks has been. September 2017. Source: Bloomberg
BTC’s token price fell from $69,000, which was a record high, to $33,000 last month due to a selloff in risk-on markets. This decline was caused by the Federal Reserve’s decision in January 2022 to raise benchmark rates aggressively against rising consumer prices. They reached their four-decade high of $12,000 in January 2022.
VanEck Associates’ head of digital assets research, Matthew Sigel, predicted that Bitcoin would fall along with Nasdaq, and other U.S. stock indices, although more severe. He does note that Bitcoin volatility has been trending down in recent years. Comparatively, the Nasdaq 100 has shown more standard deviation moves over its five-year average.
According to the outlook, Bitcoin is steadily improving and becoming a reliable safe-haven asset that can withstand rising inflation. Its correlation with tech stocks and other risk-on assets could decrease.
Related: U.S. Inflation Breaks 40-year Record: Can Bitcoin be used as a hedge asset or?
“It’s correlated for now,” James Butterfill, head research at CoinShares data analytics firm, said to Bloomberg. He added that cryptocurrency is “quite sensitive” to rising interest rate fears. He also noted:
What happens if you make a policy error? “But what happens if you make a policy mistake, i.e. the Fed raises too quickly or doesn’t increase enough? That would lead to an inflation problem. This would be more favorable to Bitcoin than it would be for equities.
Joey Krug CEO of Pantera Capital, a crypto-focused hedge funds, predicts that the decoupling will occur in “the next number of weeks,” pointing out that “crypto” will trade on its own.
The $100K BTC price goal
Demeester pointed out that Bitcoin’s ability, despite being under pressure from its Nasdaq correlation, to hold around $50,000 was one of the main reasons it could begin a run up towards $100,000.
— Tuur Demeester (@TuurDemeester) February 19, 2022
This price target was in line with Goldman Sachs’s expectations at the start of 2022. The global investment giant manages assets worth $1.2 trillion. It noted that Bitcoin could reach $100,000 if the company takes some of the market share for gold, a traditional safe-haven. Bitcoin’s market capital today is less than 6% of that of gold.
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