Cryptocurrency analysis firm Santiment has issued a compelling assessment of the recent Bitcoin price drop. The firm emphasized the historical correlation between Bitcoin and the S&P 500 index, stating that the current divergence could signal “oversold” territory.
In its report, Santiment reminded that since early 2022, Bitcoin and the S&P 500 have been similarly affected by global monetary policies and geopolitical developments:
“When investor sentiment shifts in risk-on assets, Bitcoin and the S&P 500 typically move in the same direction. When stocks show resilience, this signals continued risk appetite, and it often carries over into crypto.”
While the S&P 500 has lost only 1.6% in the last week, Bitcoin is down 12.2%, approaching the $100,000 level, indicating that the crypto market is under extreme selling pressure, according to Santiment:
“Excessive volatility in crypto markets often causes a ‘rubber band’ effect. After panic selling by investors, a strong rebound can occur when selling pressure subsides.”
Santiment also argued that the fact that stocks and even gold are maintaining their price levels is a positive sign for patient crypto investors:
“If the S&P 500 stabilizes or rebounds, Bitcoin's sharper decline could offer further upside potential. This divergence is not a structural weakness, but rather an opportunity for patient investors.”
*This is not investment advice.
