Investors looking to historical data for clues on whether Bitcoin’s current slump is drawing to a close may be disappointed to see that price rebounds have tended to lag those posted by the stock market.
The largest digital currency by market value rarely sits within a close range of its all-time highs, according to data complied in a report by Bitooda Holdings Inc. By comparison, major U.S. stock indices seldom fall below a 10% correction from record highs.
The S&P 500 and Nasdaq Composite have only experienced two brief bear markets since 2014, including one at the onset of the pandemic.
During that same time period, Bitcoin sustained lengthy drawdowns before hitting new heights, and currently sits in its fourth major dip.
The cryptocurrency has hit a record-high 124 times since 2014, while the S&P and Nasdaq reached fresh highs 483 and 482 times respectively, according to Sam Doctor, Bitooda’s head of research.
Bitcoin’s most recent peak of almost $69,000 in November was achieved during an easy-money environment, with regulators dropping interest rates as the coronavirus pandemic threated financial stability, according Steve Sosnick, chief strategist at Interactive Brokers LLC.
Now, as the Federal Reserve signals rate hikes to curb inflation, the token could have a more difficult path upwards, digging itself out of a rout.
“It will require more patience,” Sosnick said by phone. “I don’t see the same type of circumstances where money is just going to flood in the way we saw before.”
Bitcoin was down less than 1% to $43,650 as of 11:54 a.m. in New York.
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