Yesterday, the US equity markets had a red day, as cryptocurrency prices are showing some signs of life this week. Is this the start of the stock-crypto de-correlation? We take stock.
US stocks were uniformly in the red yesterday
In the same day yesterday, US stocks rose by $860 billion, resulting in falls. So Amazon (AMZN) lost -4.75%, Alphabet (GOOG) fell by -3.74% and Apple (AAPL) by -3.70%:
Just IN: Over $860 billion was wiped off the US stock market today. pic.twitter.com/IqFNv4qFxG
—Watcher.Guru (@WatcherGuru) November 2, 2022
The markets responded to Jerome Powell’s announcement. The Chairman of the Federal Reserve announced yesterday that the Central Bank raised its rates to the highest level in fifteen years. He also plans to continue raising themfear of reviving retreat.
With a direct effect on the stock markets. At the end of yesterday, the Dow Jones posted -1.55% and the NASDAQ fell -3.39%. But Captain Powell remained firm: for him, the US economy is not yet in recession.
“[Une récession] a broad decline across multiple industries sustained for more than two or three months. It doesn’t matter what is happening now.»
Analysis of course debatable, but which shows that the diet is in dire straitsgiven the macroeconomic situation that has only appeased.
👉 Do you want to bet on cryptos? Discover our guide to buying Bitcoin in 2022
The exchange in which the wind is sent⭐
5% off your fees with this button
Cryptocurrency (finally) uncorrelated?
If the FED Chairman pulled out the oars, and if the equity markets reacted particularly negatively, this is not the case for cryptocurrencies. This week, the price of Bitcoin (BTC) seems to be decided. to sustainably cross the psychological threshold of 20,000 dollars. What can be seen in the beginning of the decoration?
Bitcoin (BTC) price vs. S&P 500 and NASDAQ
Looking at the correlation between BTC and Ether (ETH) with specific stocks, we see that the ratio has gone down, strongly for some. As a reminder, a ratio equal to 1 indicates a perfect correlation. Conversely, a negative ratio indicates isolation:
Why is this possible correlation so widely noticed? Because it is of the value proposition carried by cryptocurrencies. That is, offering assets that are not linked to traditional markets. In fact, historically it was more complicated than that. In recent years in particular, Bitcoin and stocks have tended to move in tandem, with cryptocurrencies falling when equity markets fall.
👉 Learn more about the history of the creation of Bitcoin (BTC)
The exchange No. 1 in the world – Controlled in France
10% off fees with code SVULQ98B 🔥
Cryptocurrency no longer moving in tandem with stocks?
But that would change, according to some analysts. Yesterday’s diving tends to confirm this, as well as some cultural changes in the ecosystem. In any case, this is what analyst Simon Peters suggested to our colleagues from The Motley Fool:
“The proportion of wealth held in coins transferred in the last three months now at a historic low. […] Wealth held in coins that haven’t moved in more than three months is now higher.»
The “HOLD” seems to be in the lead then. The reason for that is that Bitcoin “purged” holders who were inclined to sell dropped. Except for minors, investors are generally not interested in selling at this price level. This means they are holding onto their BTC even as equity markets may be declining.
Will we then see the arrival of cryptocurrencies as a store of value against falling stocks? It is still far from confirmed, but the events of this week show that the story is possible.
👉 Also read – NASDAQ is about to launch a cryptocurrency management fund
Join Experts and a Premium Community
PRO
Invest in your crypto knowledge for the next bullrun
Source: IntoTheBlock, TradingView, BTC/USDT
Newsletter 🍞
Get a summary of crypto news every Monday by email 👌
What you need to know about affiliate links. This page presents assets, products or services related to investments. Some links in this article are affiliates. This means that if you buy a product or register on a site from this article, our partner pays us a commission. This allows us to continue to offer you original and useful content. There is no influence on you and you can even get a bonus by using our links.
Investments in cryptocurrencies are risky. Cryptoast is not responsible for the quality of the products or services presented on this page and could not be responsible, directly or indirectly, for any damage or loss incurred after the use of a product or service highlighted in this article on him. Investments involving crypto-assets are risky in nature, readers should do their own research before taking any action and only invest within the limits of their financial capabilities. This article does not constitute investment advice.
A journalist at Cryptoast, I fell into the cryptocurrencies pot a few years ago. I am passionate about the innovative technologies emerging from the blockchain and I like to find the crispest information to share with you.
Marine Debellor
2179 items
