Bitcoin blazes past every single stock in 2019
As traders and analysts shout from the heavens about the stock market’s “historic” first quarter, Bitcoin outperforms the broader market by orders of magnitude.
The Dow Jones Industrial Average (DIJA) — which tracks 30 of the biggest U.S. companies — saw a 12% rally in the first few months of 2019 — an impressive uptick by stock market standards. In fact, the Dow managed to surpass the annual stock market return average of 10% in the first three months of the year.
As you can see in the above chart, however, Bitcoin gained 44% since the start of the year, leaving the Dow positively in the dust. Indeed, when compared side by side Bitcoin’s meteoric rise makes the stock market rally look rather weak, with Bitcoin carving out its new 2019 high last week at $5,500 on Coinbase.
Bitcoin gives Apple, IBM and Microsoft a run for their money
To put things into perspective, let’s consider some of the largest companies in the 30 giant-strong Dow, including Apple, Disney, Goldman Sachs and McDonald’s. As can be seen in the below figures, not a single company came close to Bitcoin’s performance, save Cisco which chalked up a notable 28% increase year-to-date. Meanwhile, Apple holds a close second at 27%, followed by IBM and United Technologies at 25% and 32% respectively.
An emerging DOW-BTC correlation?
The crypto crowd has long considered Bitcoin to be a non-correlated asset when compared to stocks. The idea is that Bitcoin is a means to diversify out of stocks when volatility and market uncertainty take hold.
However, this could change as more institutional money pours into Bitcoin and cryptocurrencies in general. As reported by the Malta A.I. & Blockchain Summit, big fish are coming around, with Visa hopping on the bandwagon to hire a technical product manager for its VISA Crypto team back in March. Adding to these little victories is IBM’s Stellar-based Global Payments Network which aims to “streamline the ability of businesses and consumers to move money around the world in real time… We are convening a brand-new network in 72 countries that will support pay-in and pay-out end points in 48 currencies”, as per comments by IBM’s Jesse Lund.
With Q1 figures for 2019 in, it might be that Bitcoin and Dow behaviour have more in common moving forward into the rest of the year. Indeed, as Wall Street high-rollers told news outlets last week, investors might be more inclined to treat cryptocurrencies as a “risk-on” asset, similar to stocks.
Economist Alex Kruger explains:
In my opinion crypto will behave like a highly correlated high-beta asset class. Not where you go to for diversification purposes.
Bitcoin relief rally or long-term bull market?
It remains to be seen whether Bitcoin’s 44% surge is a relief rally or a more sustained bullish trend shift. From technical perspective, Bitcoin is trading above the 200-day EMA (Exponential Moving Average), which suggests a more sustained shift to the upside. However, the RSI (Relative Strength Index) is hugging over-bought territory as it moves along its November 19th trendline. The daily Stoch RSI still has a way to go on the daily but is slammed in overbought territory on the weekly chart. The bullish quarterly outlook would result in a retest of the $6,000 price point where heavy sell pressure is expected. On the flipside, should the market break bearish then a retest of the $4,100-$4,200 region would ensue.
This is not financial advice.
