JPMorgan Expects the S&P 500 to Rally, Will Bitcoin Follow?

JPMorgan is predicting a 10 percent rally for the S&P 500, and that the industrial and construction material stocks will be the benefiting sectors of the US markets next year.

Grace Peters, head of equities strategy at the wealth management arm of the JPMorgan Private Bank, said that investors should be adding cyclical exposure to their investment portfolios during the economic recovery after the coronavirus pandemic. 

JPMorgan expects that the S&P 500 would rise to between 3,500 and 3,600 by the end of 2020, and 3,750 by this time next year, a 10 percent growth from its recent close at 3,352. 

Peters added that the upcoming US presidential election would be unlikely to drive share prices in the longer term, based on analysis of elections in the past. According to JPMorgan’s analysis of markets during the years of US elections dating back to the 1930s, whether President Donald Trump or Democratic nominee Joe Biden would win would “unlikely to materially drive share prices.”

Although the S&P 500 is expected to rise, according to JPMorgan, Bitcoin has been showing signs of weakness lately. Bitcoin is trading at $10,692 at press time, and has been trading sideways for nearly a week. Bitcoin has struggled to move past $11,000 for some time. 

The world’s largest cryptocurrency’s network’s health has been in decline over the past week. According to crypto analytics firm Glassnode, there has been a lack of new entrants to the Bitcoin network, and BTC’s adoption among new users and investors have not grown much either.

Bitcoin’s network growth has dropped from a score of 74 to 64 points over the past week, a decrease of 13.5 percent. Glassnode explained:

“Network Health dropped from a score of 74 to 64 points over Week 39, decreasing by 13.5%. The network growth subcategory lost 8 points due to a decline in the number of new users joining the Bitcoin network. Meanwhile, network activity dropped by 10 points as the number of BTC transactions also fell.”

Glassnode also added that on-chain transactional liquidity has been growing, while trading liquidity also decreased due to lower exchange deposits. 

Bitcoin has shown a correlation with the S&P 500, although there seems to be a decoupling with BTC and the stock market. Willy Woo predicted that Bitcoin (BTC) will soon decouple from the stock market, if the stock market crashes. In this case, if the S&P 500 were to rise, perhaps Bitcoin would still be able to see more growth.