Recent data has revealed an interesting shift in the correlation between Bitcoin and US stocks. Previously, these assets were positively correlated, with their prices moving in tandem. However, the latest data from IntoTheBlock shows that Bitcoin’s correlation with the Nasdaq 100 and S&P 500 has now dropped significantly to -0.78 and -0.83, respectively. This indicates a strong negative correlation between Bitcoin and these stocks, where their prices tend to move in opposite directions.
The decline in correlation has been attributed to the massive selling pressure that Bitcoin is currently facing. Reports suggest that the selling pressure is largely driven by factors such as the German government offloading bitcoins seized from illegal activities. This continuous selling pressure has created a scenario where Bitcoin has detached from the performance of US equities, which are currently trading at all-time highs.
As a result of the disconnect from US stocks, Bitcoin has been on a major downtrend compared to the Nasdaq 100 and S&P 500. Data shows that while the US stocks have enjoyed considerable rallies, with the Nasdaq 100 and S&P 500 up over 7% and 4% in the last month, Bitcoin has experienced a significant decline of over 15% during the same period. The selling pressure on Bitcoin is likely to continue impacting its price movement in the short term.
The upcoming release of the US Consumer Price Index (CPI) inflation data on July 11 is expected to provide further insight into the dynamics between Bitcoin and US stocks. Positive inflation data could potentially trigger a rebound in Bitcoin’s price, as investors view it as a hedge against inflation. This development is likely to be bullish for Bitcoin and the broader crypto market in the near future, as investors seek alternative assets to protect their wealth.
The current disconnect between Bitcoin and US stocks highlights the evolving nature of the cryptocurrency market and its relationship with traditional financial assets. The shift in correlation and the impact of external factors such as selling pressure demonstrate the volatility and unpredictability of cryptocurrencies like Bitcoin. Investors and traders in the space need to closely monitor these developments to make informed decisions and navigate the changing landscape of digital assets.
