Bitfinex: Interest in risky assets has returned to traders
A study conducted by the cryptocurrency exchange Bitfinex showed that after the recent decline in the crypto market, traders have regained interest in risky assets.
In their report, analysts note that now the dynamics of the bitcoin price is clearly correlated with the performance of shares of U.S. companies, which means that the cryptocurrency market has returned to the mood for trading risky assets. Also, the market decline led to a significant volume of liquidations of margin positions.
“The market recovery occurred against the backdrop of strengthening positive correlation between bitcoin and the US stock market. After bitcoin hit a low in early August, we saw a weak correlation, but the price spurt on August 23 led to a sharp increase in the correlation, which we believe indicates a return of risk appetite. It is also worth noting the significant liquidations of short positions on that day, as well as a decrease in open interest, which indicates a significant reduction in leverage in the market,” the report said.
One of the factors in the sharp recovery of the cryptocurrency market was the comment of the head of the Federal Reserve System (Fed) of the United States Jerome Powell (Jerome Powell) on the possible reduction of the prime rate. At the same time, analysts note that higher-risk assets such as bitcoin are slightly delayed in their reactions compared to less volatile markets such as equities. Given the rise in U.S. stocks, it's entirely possible that the cryptocurrency market will continue to rally as well.
“The market is clearly demonstrating a propensity for risk, which is facilitated by the inevitability of lower prime rates and the absence of large BTC injections into the market - the German authorities have completely gotten rid of confiscated bitcoins, and reimbursement of losses to MtGox customers is almost complete,” the researchers conclude.
Earlier, Bitfinex experts called bitcoin an excellent safe haven asset.
