Bitcoin Now Undervalued vs S&P 500, According to This Metric

cryptonews.com:

Bitcoin (BTC) is now undervalued versus the S&P 500.

That’s according to a metric that runs an Ordinary Least Squares (OLS) regression of the relationship between bitcoin and S&P 500 over the last 200 days to estimate of fair value for the Bitcoin price based on the current S&P 500 price.

This methodology (an OLS regression of the Bitcoin and S&P 500 prices over the last 200 days) comes up with a fair value of 27,550 for BTC.

At its current price almost exactly $1,000 lower in the mid-$26,000s, bitcoin is currently undervalued versus this estimate of fair value by around 3.7%.

That’s the biggest undervaluation bitcoin has seen versus its 200-day OLS regression-derived fair value to the S&P 500 since mid-February.

Bitcoin and US stocks, particularly growth stocks, have historically had a close trading correlation, with analysts viewing both as speculative risk assets that are sensitive to shifts in interest rates.

US equity markets have been led higher in recent weeks by a surge in big tech stocks amid swelling optimism about the possibility that fast-evolving artificial intelligence (AI) technology will deliver a substantial boost to productivity and profits.

Thanks to the historic correlation between bitcoin and stocks, the more the latter rallies while the former stagnates, the more scope there is for a “catch-up” rally in bitcoin.

Bitcoin was last changing hands close to 15% lower versus yearly highs hit in the $31,000s in April, while the S&P 500 was on Thursday probing yearly highs just under 4,300.

However, the argument for a bitcoin catch-up rally to the surging equity market isn’t quite as strong as it was a few months ago.

That’s because, while the correlation between the S&P 500 and bitcoin price is still positive, it