Markets
Bitcoin No Longer Keeps Pace with US Stocks, What It Could Mean for the Cryptocurrency Market
Recent data shows that Bitcoin has completely broken away from US stocksThis is significant considering how the flagship cryptocurrency and these stocks had a positive correlation before now, which has undoubtedly had a positive impact on Bitcoin and broader cryptocurrency market.
Bitcoin has no correlation with US stocks
Data from the IntoTheBlock Market Intelligence Platform shows that Bitcoin’s correlation with the Nasdaq 100 and S&P 500 has dropped to -0.78 and -0.83, respectively. This means that Bitcoin and these assets have a strong negative correlation, with their prices tending to move in opposite directions.
Indeed, this has been the case for a while now, as the leading cryptocurrency has been in a steep decline for a while now. On the other hand, the Nasdaq 100 and S&P 500 have continued to enjoy considerable rallies. Data from IntoTheBlock shows that the Nasdaq 100 and S&P 500 are up over 7% and 4% in last monthwhile Bitcoin fell more than 15%.
A Bloomberg relationship He also highlighted the “declining” correlation between Bitcoin and U.S. stocks and attributed this decline to the massive selling pressure the flagship cryptocurrency is experiencing. Joshua Lim, co-founder of trading firm Arbelos Markets, told Bloomberg that this selling pressure caused by companies like German government has ‘put a cap’ on Bitcoin’s upside as these US stocks trade at all-time highs.
Data from IntoTheBlock shows that it is precisely this selling pressure that has caused Bitcoin to detach from these US stocks. In early June, Bitcoin’s correlation with the Nasdaq 100 and S&P 500 was 0.86 and 0.73, respectively. However, this strong positive correlation began to decline just as Bitcoin miners began to dump a significant amount of their holdings. Bitcoinist reported that these miners sold over 30,000 BTC in June.
Bitcoin also saw increased selling pressure towards the end of June thanks to the German governmentwhich has begun dumping some of the bitcoins seized from the pirated movie Movie2k. This selling pressure has not slowed down, as the German government has continued its unbridled selling this month.
Moment of Truth for BTC and the Stock Market
Bitcoin and US stocks will be tested again when the US Consumer Price Index (CPI) Inflation data is released on July 11. The long-awaited report is expected to show that inflation in the country is cooling, further strengthening the case for interest rate cuts. This development is undoubtedly bullish for these assets, especially Bitcoin and the broader cryptocurrency market.
In the short term, positive inflation data is expected to trigger a rebound in the price of Bitcoin, which is currently trying to recover $60,000 as support. Cryptocurrency analyst Justin Bennet warned that Bitcoin must stay above $57,800 or risk falling to up to $50,000.
Featured image created with Dall.E, chart from Tradingview.com