Jackson stated that while the observed trend is statistically valid, it is too inconsistent to yield a dependable advantage compared to simply holding stocks over the long term.
- Eric Jackson found that Bitcoin has historically outperformed the S&P 500, backing Tom Lee’s broader thesis.
- He noted that following a positive month for Bitcoin, the S&P 500 saw an average increase of 1.46%.
- Conversely, after a negative month for Bitcoin, the S&P averaged a mere +0.23%.
Eric Jackson, founder of EMJ Capital, assessed FundStrat’s Tom Lee’s claim that cryptocurrency has typically led the stock market by about a month. Jackson affirmed that Lee’s fundamental observation is statistically validated but considered the resultant trading signals too erratic to be actionable.
In his analysis of 143 months of historical data for Bitcoin (BTC) and the S&P 500, beginning in September 2014, Jackson shared his findings on his Substack this Tuesday. He confirmed the statistical validity of the pattern.
He elaborated that an uptick in Bitcoin’s performance typically leads to an average 1.46% growth in the S&P 500. After a downturn in Bitcoin, the S&P reported an average increase of only +0.23%.
The Signal Diminishes Quickly
Jackson discovered that the impact dissipated quicker than expected. Instead of extending over a month, 78% of the overall response within three months occurred in the first 15 days after a Bitcoin movement, and by the fourth week, the signal was virtually non-existent.
He concluded that while the trend holds statistical relevance, it is not robust enough to outperform the market. He measured this with the Sharpe ratio, a well-known metric that assesses the returns of a strategy against its associated risks.
Jackson found that acting on this signal yielded returns comparable to a straightforward buy-and-hold strategy, indicating that daily market fluctuations overshadowed any potential advantage of the signal.
In a previous statement during an interview, Jackson predicted Bitcoin could reach a value of $50 million per coin by the year 2041.
Bitcoin’s valuation decreased by 0.3% over the last 24 hours. On Stocktwits, public sentiment surrounding BTC hovered in the ‘neutral’ category, with discussions remaining at ‘normal’ levels throughout the day.
Insights from Tom Lee
Jackson’s analysis was in direct response to comments from Tom Lee of Fundstrat on CNBC, who presented a counter-cyclical bullish perspective for September, despite market downturns, rising oil prices, and increasing yields.
Lee suggested that inflation concerns might ease in the coming weeks, referencing Friday’s job report, the upcoming Consumer Price Index (CPI) update for August, and the September Federal Reserve rate decision as drivers that could diminish the chances of a rate increase.
He also indicated that this year’s inflation might stem primarily from a specific segment of the economy—particularly computer chips and software—rather than the everyday expenses like gas that most consumers generally notice.
Beyond his involvement with Fundstrat, Lee serves as chairman for BitMine Immersion Technologies (BMNR), the largest corporate holder of Ethereum (ETH). During midday trading, BMNR stock saw a decline of over 1%. On Stocktwits, public sentiment around BMNR remained in the ‘bullish’ range, while discussions around it shifted to ‘normal’ from ‘high’ in the past day.
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