As a seasoned crypto investor with a knack for reading market trends, I find the rising correlation between Bitcoin and U.S. equities intriguing. Having navigated through numerous market cycles, I can attest that this phenomenon isn’t entirely new but certainly warrants close attention.
Over the past month, the relationship between Bitcoin and the U.S. stock market has grown stronger, evident in the synchronized drops and recoveries among various investment categories during the recent Japanese yen turbulence and the Federal Reserve’s remarks at their Jackson Hole symposium.
The latest Bitfinex Alpha report indicates that the Pearson Correlation coefficient, a metric used to gauge the degree of association between Bitcoin (BTC) and stock market indices like the S&P 500 and NASDAQ, has grown over the past 30 days. This trend began on July 12, but since the August 5 low during the yen crisis, Bitcoin has generally underperformed compared to these indexes.
Bitcoin’s Rising Correlation With Equities
After Fed Chair Jerome Powell’s remarks at the Jackson Hole symposium on August 23, I observed a substantial rally in Bitcoin (BTC), the crypto market, stock market indexes, and other risk assets. This recovery, which had begun in early August, continued following his hint that the Federal Reserve might modify its monetary policy and lower interest rates. In contrast to the rise in risk assets, the U.S. dollar index experienced a decline of over 0.83%.
The S&P 500 index advanced to 5461, just 0.7% below its record-breaking peak (peak value), and marked a substantial rebound from the 8% drop during the yen crisis. Furthermore, impressive gains were observed in various other assets, such as gold.
Conversely, Bitcoin experienced a 6% daytime spike, which is one of its highest single-day increases since May 20th. Financial experts interpret this price hike as a revival of market optimism.
Room For Prices to Rally
Even though Bitcoin experienced a surge recently, it has still been less strong compared to stocks. This can be seen in the S&P 500 regaining its August 1 peak and initial levels on August 15, followed by a significant rise towards its all-time high on Friday. In contrast, Bitcoin managed to reach $65,000 only on the same day. However, analysts point out that it’s typical for higher-risk assets like Bitcoin to follow market trends later than lower-risk investments such as stocks.
Currently, analysts are observing that Bitcoin’s trading pattern aligns with previous bull markets. This bullish trend appears to be fueled by a positive market atmosphere, which is in part due to the temporary shortage of supply and the expected interest rate reductions.
From my perspective as an analyst, the current market landscape shows a comparatively smaller proportion of leveraged long positions. This situation potentially creates more scope for Bitcoin and other altcoins to experience price surges.
Read More
- PENDLE PREDICTION. PENDLE cryptocurrency
- W PREDICTION. W cryptocurrency
- AAVE PREDICTION. AAVE cryptocurrency
- FIO PREDICTION. FIO cryptocurrency
- BONE PREDICTION. BONE cryptocurrency
- WALV PREDICTION. WALV cryptocurrency
- CAMIKAZE78: BattleBit’s MUST USE Weapons! (Before the TTK Update)
- French President Macron Addresses Telegram CEO Durov’s Arrest as Legal Matter, Not Political
- Why Destiny 2 Fans Are Concerned About the Game’s Narrative Future
- Coinbase Calls Campaign Finance Violation Accusation Misinformation
2024-08-27 18:38