Bitcoin Falling Behind US Equities: What It Means For Crypto
Recent research reveals Bitcoin has entirely separated from US stocks. This is crucial since the flagship crypto and these stocks had a favorable association prior, which benefited Bitcoin and the crypto market.
Market analytics tool IntoTheBlock reports that Bitcoin's correlation with the Nasdaq 100 and S&P 500 is -0.78 and -0.83, respectively. Bitcoin and these assets have a high negative connection, with prices moving in opposing directions.
Since the flagship crypto has been in a big slump, that has been the case for a time. But the Nasdaq 100 and S&P 500 have been rising. The Nasdaq 100 and S&P 500 are up over 7% and 4% in the previous month, whereas Bitcoin is down over 15%, according to IntoTheBlock.
According to Bloomberg, Bitcoin's “collapsing” connection with US stocks is due to enormous selling pressure. Joshua Lim, co-founder of Arbelos Markets, told Bloomberg that selling pressure from the German government has “put a cap” on Bitcoin's potential as US equities trade at record highs.
Bitcoin has detached from these US equities due to selling pressure, according to IntoTheBlock. Starting in June, Bitcoin's correlation with the Nasdaq 100 and S&P 500 was 0.86 and 0.73. This high positive connection dropped when Bitcoin miners sold off a lot of their holdings.
In late June, the German authorities sold part of the bitcoins confiscated from the pirated movie Movie2k, increasing selling pressure. The German government has kept selling this month.
Bitcoin and US markets will be challenged again on July 11 when US CPI inflation data is revealed. The much-anticipated data is likely to reveal falling inflation, supporting interest rate decreases. This bodes well for Bitcoin and the crypto industry.
Bitcoin is striving to recapture $60,000, and favorable inflation data is likely to boost its price. Bitcoin must stay above $57,800 or risk falling below $50,000, according to crypto expert Justin Bennett.
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