- Analyst Willy Woo believes that bitcoin is heading toward a decoupling from stocks, powered by bitcoin’s internal adoption.
- He believes that bitcoin’s movement in the future will be determined by organic adoption, not external investment.
- Woo believes that the adoption fundamentals are the single most important factor in bitcoin’s future.
On-chain market analyst Willy Woo believes that bitcoinâ€™s market movement will soon cease to correlate with that of traditional markets, as has been the case until now.
Writing on hisÂ TwitterÂ account, Woo shared data fromÂ GlassnodeÂ showing a clear multiyear uptrend in bitcoin adoption.
In his view, this is part of a growing body of evidence that bitcoin now functions as a long-term store of value for a growing number of â€˜HODLers.â€™ This, he says, will exert more influence over the bitcoin price than â€œhedge fund and whale traders,â€ which will effectively decouple bitcoinâ€™s performance from the S&P 500.
Background of Wooâ€™s Prediction
Wooâ€™s prediction comes against a backdrop of a significantÂ correlationÂ between bitcoin and stocks. This has led to fears in some quarters that macroeconomic factors such as interest rates, unemployment andÂ inflationÂ could exert influence over the bitcoin price â€” and by extension the entire crypto market, which largely defers to bitcoin.
Not every analyst, however, agrees that there is in fact a correlation. Heisenberg Capital founder Max Keiser believes that in fact â€œbitcoinâ€¦is inversely correlated to the USD â€” not the stock market.â€ He adds, â€œDonâ€™t be fooled by randomness.â€
The charts below illustrate an apparent correlation between stocks and bitcoin over a five-year period
Wooâ€™s Decoupling Prediction
According to Woo, bitcoin is nearing a point in its life cycle where something he describes as â€œinternal adoptionâ€ is exerting greater influence over market movements than investment from external sources. Explaining what â€œinternal adoptionâ€ means, heÂ wrote in a tweet:
â€œItâ€™s adoption from long-term organic growth of HODLers. As opposed to hedge funds and whale traders moving capital in and out of BTC as they trade and hedge positions.â€
Wooâ€™s view is that traditional investors interact with bitcoin as a hedge, with the unintended consequence of creating correlation. This position on mainstream bitcoin investment is in line with thatÂ describedÂ by Fortune Brainstorm Finance Co-Chair Robert Hackett in June 2020.
According to Woo, however, bitcoinâ€™s user adoption rubicon has already been crossed. This, he says, effectively reduces the importance of institutional investment as a fundamental driver of bitcoinâ€™s price.