Bitcoin Moves Differently From US Stock Market, Correlation Weakening?
14 Novembro 2022 - 2:42PM
NEWSBTC
Data shows while Bitcoin has been correlated with the US stock
market for some time now, the two haven’t moved in tandem recently.
Bitcoin Correlation With US Stocks May Be Weakening As BTC Has Been
Moving Differently As pointed out by an analyst in a CryptoQuant
post, BTC has gone down in the past week while stocks have made
some gains. A “correlation” between two assets (or markets) exists
when both their prices follow the same general trend over a period
of time. For Bitcoin, there has been a strong correlation with the
US stock market during the last couple of years or so. The reason
behind the markets becoming so tied is the rise of institutional
investors in the crypto. Related Reading: Smooth Love Potion Price
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Investment Such investors view BTC as a risk asset and pull out of
the coin as soon as there is macro uncertainty looming over the
market (hence driving the crypto’s price down along with the
stocks). Here is a chart that shows the prices of Bitcoin, S&P
500, and NASDAQ over the last few years: Looks like the assets have
followed similar trends in recent times | Source: CryptoQuant As
you can see in the above graph, Bitcoin wasn’t correlated with the
stock market in 2019 and early 2020, but it all changed when COVID
struck. After the black swan crash that occurred in March 2020, the
price of BTC started following S&P 500 and NASDAQ. Though,
while BTC showed a same general long-term trend, the crypto
continued to be much more highly volatile than the stocks. Related
Reading: Bitcoin Price Downtrend Far From Over, Why BTC Could Test
$15K The correlation has continued through the bear market, but the
last week or so has turned out different. While the US stock market
has seen some uplift in the past 7 days, Bitcoin has instead taken
a sharp plummet. These markets showing different behavior recently
could suggest the correlation between them may be reducing. With
the latest plunge, BTC has also lost the support line of the
previous all-time high, something that has never happened in the
previous cycles. The quant in the post notes that this recent trend
is a sign of weakness in the crypto market, which could lead to
further downtrend in the near future. BTC Price At the time of
writing, Bitcoin’s price floats around $16.5k, down 20% in the last
week. Over the past month, the crypto has lost 15% in value. The
below chart shows the trend in the price of the coin over the last
five days. The value of the crypto seems to have remained below
$17k in recent days | Source: BTCUSD on TradingView Featured image
from André François McKenzie on Unsplash.com, charts from
TradingView.com, CryptoQuant.com
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