A brand new report from Copper.co, a Swiss-based digital asset service supplier, highlights a big alignment between Bitcoin BTC/USD, Ethereum ETH/USD and the S&P 500.
What Occurred: The report notes that each cryptocurrencies have achieved an 83% compound annual progress price (CAGR) since their 2020 lows, in comparison with the S&P 500’s 20% CAGR over the identical interval.
The findings come as Ethereum briefly dipped beneath a key trendline on the five-year anniversary of Black Thursday however closed above it, elevating questions on its potential to keep up this degree.
Copper.co’s evaluation particulars the efficiency of Bitcoin and Ethereum over the previous 5 years, with Bitcoin dropping from $94,265 on March 3 to $80,699 by March 10, and Ethereum falling from $2,518 to $2,020 over the identical interval, in keeping with information sourced from Copper Calc and TradingView.
Regardless of these declines, each belongings have proven equivalent long-term progress since March 13, 2020, with Bitcoin’s closing value CAGR at 70%, simply 1% above Ethereum’s.
The S&P 500, presently in correction territory, mirrors patterns noticed in 2020, suggesting a doable market shift.
“Ethereum and Bitcoin have tracked remarkably related progress trajectories since their 2020 lows, with each delivering an 83% CAGR,” Fadi Aboualfa, Copper.co’s Head of Analysis instructed Benzinga, including, “The S&P 500’s correction echoes patterns seen in 2020, which suggests a possible turning level and raises optimism ranges for buyers on the lookout for a bounce.”
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Why It Issues: The report additionally explores Bitcoin’s relationship with the M2 International Liquidity Index, which has traditionally correlated with Bitcoin’s value actions at a median of 0.82 since 2015, with a typical lag of 10 to 14 weeks.
The most up-to-date M2 cycle bottomed on Jan. 10, indicating Bitcoin might commerce sideways till late March or April, based mostly on 70-day and 100-day lags, respectively.
Copper.co famous this timeframe aligns with prior research, together with its Market Cap vs. Realized Market Cap evaluation and Bitcoin value simulations, which counsel a possible value peak of $160,000 by Could or June, when markets may overheat.
Nevertheless, the report cautions that M2 should proceed rising to maintain this pattern, an element usually neglected in such analyses.
From a portfolio perspective, Copper.co applies Fashionable Portfolio Concept, discovering that Bitcoin’s 70% annualized volatility, a 4% risk-free price, and a 0.25 correlation with the S&P 500 counsel an optimum allocation of 18% Bitcoin to maximise the Sharpe Ratio.
“As of in the present day, the risk-to-return symmetry is placing. With the S&P 500 delivering a 20% CAGR over the previous 5 years, this means a 4:1 risk-reward ratio in comparison with crypto belongings,” Aboualfa said, emphasizing the potential for balanced funding methods.
The report, meant for institutional {and professional} purchasers, features a disclaimer that digital belongings carry excessive dangers and is probably not appropriate for all buyers, reflecting Copper.co’s adherence to Swiss monetary laws.
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