The latest data reveals a significant change in Bitcoin’s relationship with US stocks. Previously, Bitcoin had a positive correlation with major US stock indices such as the Nasdaq 100 and S&P 500, leading to a positive impact on the overall crypto market. However, recent findings from the market intelligence platform IntoTheBlock indicate that Bitcoin’s correlation with the Nasdaq 100 and S&P 500 has shifted to -0.78 and -0.83, respectively. This negative correlation suggests that Bitcoin and these assets are now moving in opposite directions.
In light of the changing correlation, Bitcoin has entered a significant downtrend while the Nasdaq 100 and S&P 500 continue to see substantial rallies. Data from IntoTheBlock shows that the Nasdaq 100 and S&P 500 have experienced gains of over 7% and 4% in the last month, in stark contrast to Bitcoin’s decline of over 15%. A recent Bloomberg report attributes the diminishing correlation between Bitcoin and US equities to the mounting selling pressure facing the cryptocurrency.
The selling pressure on Bitcoin has been exacerbated by various factors, including efforts by the German government to sell off seized bitcoins. This selling spree, alongside actions by Bitcoin miners to offload significant holdings, has contributed to the detachment of Bitcoin from US stocks. Joshua Lim, co-founder of trading firm Arbelos Markets, highlighted that selling pressure from entities like the German government has constrained Bitcoin’s potential upside, particularly as US stocks reach record highs.
Looking ahead, Bitcoin and US stocks face further tests with the impending release of the US Consumer Price Index (CPI) inflation data on July 11. This data is expected to have a significant impact on both assets, potentially sparking a rebound in Bitcoin’s price in the short term. As Bitcoin strives to regain support at $60,000, positive inflation data could serve as a catalyst for renewed growth in the cryptocurrency market.
The evolving correlation between Bitcoin and US stocks underscores the complex dynamics at play within the crypto market. As Bitcoin navigates through challenges such as selling pressure and economic data releases, its resilience and ability to adapt will be crucial in shaping its future trajectory amidst a changing financial landscape.
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