Bitcoin defies decline in risk assets to trade at 19-month high
The cryptocurrency token rose 4.5% to $43,940 on Tuesday, with a surge over the past week pushing the price above $40,000 for the first time in nearly two years.
This difference highlights Bitcoin's low correlation with other assets. The correlation between Bitcoin, stocks, and gold has dropped since 2023, helping the largest digital asset gain 160%.
This could be just the beginning, will we see strong growth in cryptocurrencies.
Cryptocurrency-related stocks also extended gains. Coinbase, MicroStrategy and Marathon Digital are all up on the day and are up more than 300% this year. Correlation indicators also suggest a combination of a cryptocurrency bull cycle and a favorable economic environment for risky assets.
Another important driver is regulation. Crypto executives hope the US crackdown is over. We may see more dialogue between the government and regulators. Clarity from the authorities could give momentum to the development of cryptocurrencies.
Technical indicators show that Bitcoin's price rally is still ongoing. The 14-day relative strength index is at 75, near the overbought threshold. Bitcoin's recovery is also fueled by hopes for a Bitcoin spot ETF.
Another important driver is the Bitcoin ETF. Waiting for a decision in January next year.
