Bitcoin Price Holds Near $3,800; On Track to Outperform S&P 500 This Month

Bitcoin’s price held relatively steady on Thursday, as markets consolidated in the wake of several oversized moves in both directions. The leading digital currency this month has outperformed the S&P 500 Index by a considerable margin, highlighting the extent of the recent stock-market selloff.

BTC/USD Update

The bitcoin price reached a session high of $3,968.80 on Bitfinex, where it had a considerable premium relative to other exchanges. BTC/USD last reflected a price of $3,864 on Bitfinex compared with $3,745-$3,750 on Coinbase, Bitstamp and Bittrex.

Aggregate data provided by CoinMarketCap show an average price-per-coin of $3,800. Trade volumes have declined sharply in the latter half of the week to reach $5 billion. Daily turnover exceeded $8 billion during the recent buying frenzy, which saw bitcoin catapult $1,300 in a matter of days.

At current levels, bitcoin has a total market capitalization of $66.2 billion. Its share of the overall market is 52.1%.

In terms of technical levels, bitcoin faces strong resistance in the $4,200-$4,500 range. Price action failed to gain momentum in this region during the most recent rally attempt. Beyond this level, major tests at $4,800 and $5,000 are to be expected.

Bitcoin vs. S&P 500

The month of December marked new yearly lows for bitcoin and the S&P 500 Index, Wall Street’s primary gauge of large-cap stocks. If the month were to end today, bitcoin would have registered a December drop of 4.8%. However, it would also be trading 22% higher than its bear-market low around $3,100.

By comparison, the S&P 500 Index has declined a staggering 10.6% since Nov. 30 – and that’s with the 5% Wednesday rally included. (Read more: Dow Adds 1,000 Points in Relief Rally; Oil Levitates Following Extreme Selloff)

A leading measure of stock-market volatility known as the CBOE VIX suggests that further pain is to be expected over the next 30 days. The VIX fell sharply on Wednesday but still managed to close above 30, which is well above the historic mean. The so-called “fear index” is on track for a yearly gain of 175%, which reflects a major paradigm shift in market sentiment.

For now, bitcoin and stocks remain uncorrelated. It remains to be seen whether a prolonged bear market in equities will drive more investors into bitcoin as an alternative store of value. Alternatively, the bull market could be poised to continue for a while longer should the United States and China reach a new deal on free trade. Talks on the matter are ongoing.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi