Bitcoin price changes reflect a decline in the correlation between the asset and the stock market. However, the correlation between the two types of assets remains strong.
Correlation between Bitcoin and the stock market at its lowest level since
According to data from Bloomberg, the 40-day correlation between Bitcoin and the Nasdaq 100 index has fallen below 0.5. A level not seen since last January. At the end of June, the correlation was 0.6. Last May, it even reached the 0.85 threshold, indicating a very strong correlation between the two asset classes. At the time, equities and digital assets fell 0.5 points on the Fed’s announcement to raise interest rates by 0.5 points. A record level at the time.
According to Bloomberg, this drop in correlation could be good news for digital assets:
If this positive correlation continues to decline, one may wonder if depreciated virtual assets are near the bottom and ready for a rally.
In June, the fall in the price of Bitcoin was much greater than that of the NASDAQ. Currently, Bitcoin is trading around $20,000, roughly where it was at the end of 2020. Looking at the Nasdaq 100, the current level is heading towards the highest points, low in 2022. If points the analysis of Bitcoin, it is clear that a decrease in correlation is also attributable to the main altcoins.
Bitcoin / Nasdaq: These markets always remain correlated!
We should not be forced to say what we are not saying. In fact, a drop in the correlation index does not mean that there is no longer any correlation between two elements. In fact, Bitcoin, like the actions of the largest global groups, remains according to the same macroeconomic indicators. The war between Russia and Ukraine or the monetary policy of central banks in particular.
Therefore, investors in the crypto markets and the equity market will continue to scrutinize certain macroeconomic variables such as the employment rate, but above all inflation in the United States and Europe. Published yesterday, the latest US inflation figures show a general rise of 9.1% in prices over the rolling 12 months. the risk of recessionwhich has been mentioned many times in recent weeks, should stimulate the debate about all risk assets.
Despite a particularly gloomy macro context, some market participants or followers say they are confident. This is especially true for Sam Bankman Fried, CEO of the FTX platform. He recently told Real Vision that he doesn’t see much reason to believe that the crypter hasn’t been established yet. Does he plead for his parish or does he really mean it? For his part, Jordan Belfort, known as the Wolf of Wall Street, believes that market participants may increasingly consider Bitcoin as a store of value.
Crypto-assets are a risky investment.
Also read: Bitcoin, a better store of value than gold?