Bitcoin To Outperform The S&P 500 For The Next Year?

I’m seeing this discussion start to pick up steam so let's look at some charts to see what they tell us about the next 12 months

Just a few weeks ago people were declaring crypto dead, claiming this time is different and there would not be another cycle. I was even personally told by a mentor of mine (a great equities trader) in late September that I would never make any money on my crypto holdings.

It was no secret that on a relative basis stocks, especially tech stocks, were outperforming Bitcoin all year. Driven by the AI hype, stocks like Nvidia have gone up over 300% blowing past their all time highs.

Things were truly in question for crypto as it stagnated and stocks outperformed. However, just like everything in investing when sentiment gets extreme and everyone is in one trade the market usually snaps back in the other direction.

So, are we starting to see the tables turn back in favor of crypto outperformance? Let’s look at some very compelling charts that suggest the answer is yes.

Firstly, the anticipation of the Spot BTC ETF is increasing, and Bitcoin has been outshining other assets in terms of risk-adjusted returns over a four-year period. This is driven by its growing momentum and its potential to be seen as a superior alternative to traditional assets by major asset managers, such as BlackRock, as we move toward a digital economy.

The Sharpe Ratio, a key metric for assessing risk-adjusted returns, plays a pivotal role in this evaluation. This is an equation used by asset managers to tell how much return an asset provides relative to its risk.

As you can see by this chart, Bitcoin is the best risk to reward investment when compared to nearly all other major assets over a 4 year period. That means that major asset managers simply cannot afford to ignore this.

Second, we have the BTC/SPX weekly chart provided by ReflexivityResearch.

This is a high time frame chart comparing the performance of Bitcoin to the performance of the S&P500. What we have here is a powerful pattern that has just begun to break out. Since the beginning of 2023 we have a series of higher lows showing accumulation and then a strong move up. This is not a pattern to ignore.

Thirdly, my favorite chart based on cycles by Market Occultations on twitter

This is an SPX vs Bitcoin cycle. As you can see we are at a critical juncture. This chart suggest that if we “rhyme with the past” we could see a substantial drop in the SPX performance versus Bitcoin over the next 12 months.

Lastly, I have started my analysis on what 2024 could bring for the stock market and it’s interesting to say the least. I have a lot more work to do but I believe we are looking at a very tumultuous year for equities markets. We have a lot to consider in the global picture as well as at home with the looming presidential election. I am not saying there will be a crash but I am saying it will be hard to beat the performance we saw this year in stocks.

What does that mean for BTC and its outperformance? According to our 4 year Bitcoin cycle it should be quite a bullish year for BTC especially with the halvening coming up history would suggest the 2nd half of 2024 would be the beginning of the end. Meaning, the start of the 12-15 month up only period where the cycle concludes. However, if stocks are having a rough year or going sideways/slightly down Bitcoin could go sideways and still outperform.

Outperformance does not necessarily mean that we are going to see new all time highs in the next six months it simply means crypto is setting up to hold up better or rise faster versus stocks. This is a very significant development because asset managers are being paid big money to outperform. They will be forced to seriously consider crypto over stocks in this case and an ETF would be the perfect way for them to get exposure and bring substantial amounts of money into crypto.