With adoption comes correlation. As bitcoin’s presence becomes more normalized in TradFi, its price has formed stronger relationships with market indicators.
Let’s take a look back at a few economic events that have demonstrated this trend.
Narrative: BTC is an inflation hedge
It’s April 2021, and the CPI saw its highest year-over-year increase since 2008 at 4.2%. BTC’s price surged from the $50K level to the $60K level.
Narrative: Excess market liquidity finds its way into BTC
It’s March 2020, and the Fed implemented an emergency rate cut in response to the global pandemic. BTC dipped and then rallied from $5K to $9K.
Narrative: BTC is not immune to market stress
It’s March 2020, and the S&P 500 dropped by 9.5% in a single day in what is known as Black Thursday. BTC plummeted from $8K to below $4K in 24 hours.
Narrative: BTC is an alternative store of value
It’s Q2 2020, and the continued impact of the pandemic led to a significant GDP contraction. BTC saw a steady rise from $9,000 in July 2020 to over $11,000 by August.
Narrative: BTC is an alternative form of investment
It’s April 2020, and the US unemployment rate reached 14.8%. BTC saw a steady rise that month from $6K to $9K.
Are you a TradFi investor yourself? If so, how do you manage your TradFi investments and crypto investments?
Learn more about the case studies above at Crypto.com University.
