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PlanB believes that S&P 500 correlation and QE bring new heights for the BTC price

Two major topics have influenced reporting in the Crypto space: the correlation of Bitcoin with the American stock index S&P 500 and the enormous expansion of the policy of quantitative easing in the wake of the Corona crisis. Due to the correlation with the S&P 500, PlanB sees a possible Bitcoin price of $18,000 or a collapse of the S&P 500 to restore the balance of the co-integrated correlation.

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PlanB is known throughout the crypto space for its stock-to-flow model, which predicts a Bitcoin price of $100,000 and $1,000,000 for the next few years and has modeled the BTC price very accurately in the past. So it’s no wonder that PlanB carries weight and many people pay attention when something is posted on the Twitter account ‘PlanB’.

This is exactly what he has been doing increasingly in the last few days and without further ado forecasts new gains in the Bitcoin share price. According to his analysis, the Bitcoin price should be around $18,000 and so it is hoped that the price will soon close the gap of almost $8,000.

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Bitcoin simply a volatile S&P 500

Two major topics have massively influenced reporting in the Crypto space in recent weeks: the correlation of BTC with the American stock index S&P 500 and the enormous expansion of the policy of quantitative easing in the wake of the Corona crisis. It is precisely these two issues that PlanB takes as a reason to announce a Bitcoin price of $18,000. But why?

While many have been waiting in recent weeks and months for BTC to decouple from the S&P 500, this certain correlation may not be so bad according to PlanB’s theory. He stated: the S&P 500 has grown by a factor of 2.6 over the last 8 years (from $1,200 to $3,100), while the Bitcoin price has multiplied by a factor of 1,900 (from $5 to $9,500).

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On a higher level, one can therefore speak of a certain correlation. It becomes interesting when one considers how the quantitative easing by central banks worldwide is pumping markets out of the crisis. Through the correlation to the S&P 500, this also indirectly helps the Bitcoin price.

PlanB wrote: “Short story about #bitcoin – correlation on the stock market. S&P500 achieved 2.6x ($1,200 -> $3,100), BTC 1,900x ($5 -> $9,500). Bitcoin looks like a stock with a high beta value. Trillions and trillions of central bank QE funds that are boosting stock markets around the world seem to be dripping on Bitcoin!”

Bitcoin rate at $18,000?

In a commentary of another post, PlanB even goes a step further and writes a bit flat that the course of the Bitcoin price looks a bit like a position on the S&P 500 with a leverage of 416x and a stop loss at -99%. This statement of course deliberately neglects all the fundamental characteristics that make BTC a special and unique asset.

Due to the correlation with the S&P 500, PlanB sees a possible Bitcoin price of $18,000 or a collapse of the S&P 500 to restore the balance of the co-integrated correlation. From his following statement, however, it is not clear whether he sees the BTC price currently at $18,000 or only for a certain point in the future.

Current S&P level implies BTC $18K (or S&P falls)

While the FED announced only a few days ago that it would expand its emergency program to buy up corporate bonds, there is no end in sight to the policy of quantitative easing. According to PlanB, this is also good for the course of Bitcoin in the long term.

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(Featured image by geralt via Pixabay)

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Desmond O’Flynn believes in minimalism and the power of beer. As a young reporter for some of the largest national publications, he has lived in the world of finance and investing for nearly three decades. He has since included world politics and the global economy in his portfolio. He also writes about entrepreneurs and small businesses, as well as innovation in fintech, gambling, and cannabis industries.