As the S&P 500 reached a record high on Friday, marking two years since the end of the 2022 bear market, it’s a prime opportunity to reflect on the parallel gains seen in the cryptocurrency market.
While U.S. equities have experienced steady growth, Bitcoin has seen explosive returns in the same time frame, illustrating its unique position in the financial landscape.
According to Opening Bell Daily, a financial newsletter, the S&P 500 has climbed more than 60% to reach approximately 5,800 points since equities hit their post-pandemic low. Over the same period, Bitcoin has skyrocketed by around 220%, rising from roughly $20,000 to over $63,000.
The Nasdaq and Dow Jones have also surged, gaining 78% and 43%, respectively, but Bitcoin’s gains have significantly outpaced those of traditional equities.
Despite Bitcoin’s recent struggles to surpass its peak price, analysts have noted that the cryptocurrency’s price movements have mirrored those of major stock indices. This correlation has been fueled by factors such as macroeconomic influences and the introduction of new financial products that allow traditional investors easier access to Bitcoin.
Bitcoin’s most recent low came in November 2022, when it dropped to around $14,750 following the collapse of the FTX exchange. Around the same time, the S&P 500 hit 3,600 points as the Federal Reserve’s aggressive rate hikes fueled concerns about potential economic slowdown.
In the months that followed, both Bitcoin and the S&P 500 rebounded to reach new heights. While Bitcoin surged to $73,000 in March 2023, the S&P 500 also notched a record high.
However, Bitcoin’s price has since dropped, sitting at about $63,250—around 14% below its all-time high. Analysts remain optimistic, though, predicting that Bitcoin’s price could swing between $50,000 and $80,000 by year-end due to factors such as the upcoming U.S. presidential election.
The Federal Reserve’s monetary policy has played a significant role in the growth of both the S&P 500 and Bitcoin. Since the 2008 financial crisis, the Fed’s balance sheet has expanded to over $7 trillion, creating liquidity that has buoyed various asset classes.
Amberdata’s Director of Derivatives, Greg Magadini, highlighted how this increased liquidity has contributed to price gains for both equities and Bitcoin.
Interestingly, the launch of spot Bitcoin ETFs has had a profound impact on Bitcoin’s trajectory. Since their introduction in January 2024, these ETFs have attracted $18.6 billion in investments, according to Decrypt, offering a new pathway for investors to engage with the digital asset without direct ownership.
Brian Rudick, head of research at GSR, emphasized that while Bitcoin and the S&P 500 share similar bull market trends, their growth has been driven by different forces. He noted that equities have benefited from rising corporate profits and expectations of continued growth, whereas Bitcoin’s gains have been significantly influenced by market developments, such as the advent of Bitcoin ETFs.
With nearly half of all surveyed investors expressing interest in digital asset ETFs, the trend of institutional participation in cryptocurrency is set to continue. As this dynamic evolves, Bitcoin’s correlation with traditional equities is expected to strengthen, making it behave increasingly like a conventional asset class.
With the two-year anniversary of the bull market arriving, both Bitcoin and U.S. equities have demonstrated their resilience, but for investors, Bitcoin’s remarkable returns highlight its potential as an alternative investment.
