2020-7-9 18:00 |
Despite major setbacks from the Black Thursday market collapse, the cryptocurrency market and Bitcoin had a strong H1 close. The leading crypto asset by market cap also beat the best performing stock market index by nearly double. Will the strength continue into the second half of the year? Recounting The Rollercoaster Ride That Was The First Half of 2020 The stock market saw a record quarterly decline when Q1 came to a close. Bitcoin and crypto, however, hadn’t fared quite as bad, despite both markets being crushed during the Black Thursday selloff. Crypto assets like Bitcoin, Ethereum, XRP, and others, have spent three or more years in a bear market. These highly oversold assets were poised for a new uptrend when the massive crash occurred. RELATED READING | FADING BITCOIN VOLATILITY VERSUS NASDAQ MAY SIGNAL BULL MARKET IS HERE Meanwhile, the stock market was coming off setting a new all-time high after nearly a decade of a continued bull market. Prior to Black Thursday, the last major stock market trough was during the Great Recession. The emerging asset class coming out of a bear market into a new bull run, and a stock market end its bull market, may have made all the difference. This can be seen in closing data from the first half of 2020, showing how Bitcoin and the crypto market vastly outperformed even the most popular stock indices. Bitcoin Beats The S&P 500 and Nasdaq During First Half of 2020 Data from the first half of 2020 shows that BTCUSD closed out the first six months with a 27% return on investment. During the same timeframe, the Nasdaq composite index has only risen by 15%. The tech-heavy stock index was among the few that not only recovered from Black Thursday but set a new all-time high after it. In related news, Bitcoin volatility against the Nasdaq has reached record lows. The last time these lows were reached, Bitcoin’s bull market began that took it to $20,000. The S&P 500 fared far worse than either crypto or the Nasdaq. The SPX closed out the first half with a 4% loss over the course of the first six months of the year. RELATED READING | GOLD CHART SHOWS WHY BITCOIN IS THE FASTEST HORSE IN RACE AGAINST INFLATION The better performance in Bitcoin may be attributed to its ability to serve as a hedge against inflation. Investors have been looking toward the asset to perform similar to gold, which recently set new highs not seen since the Great Recession. Bitcoin thus far hasn’t lived up to that same safe haven status and instead has been tightly correlated with stocks. Only 21 million BTC will ever exist, giving the hard asset a scarcity that could cause its value to skyrocket with increased demand and inflation. This demand may only just beginning, and the second half of the year could show significant outperformance in Bitcoin over stocks, if the trend continues. Featured image from Shutterstock.
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