- Bitcoin cannot escape its correlation from traditional markets
- Short-term sentiment was caught between falling optimism and increasing gloom
Bitcoin [BTC] has had an affinity for monetary policy since the start of the new market cycle, according to quantum economics expert and on-chain analyst Jan Wüstenfeld. In his December 4th CryptoQuant publicationWüstenfeld opined that BTC’s negative sentiment, accompanied by a declining economic outlook, is no coincidence.
Read Bitcoins [BTC] price prediction 2023-2024
According to him, BTC and the traditional market were not aligned prior to the current bear market. However, the fact that more institutions were now looking into the coin meant that getting out of correlation was inevitable. At the same time, the federal government’s interest rate hike also played its part.
Source: CryptoQuant
It is no longer in retail control
The analyst also noted that the market was subsequently freed from the sole control of retail investors. As he justifies his point of view, desert field said
“We have seen broader adoption of Bitcoin over the past few years. Futures markets are being introduced, institutional interest is increasing, etc. So, of course, Bitcoin is more connected to traditional financial markets and is no longer driven solely by retail investors.”
Of course Bitcoin had correlated with the stock market at some point. In fact, the king coin had also reacted to the US inflation reports in some cases. However, the analyst’s forecast was rooted in a long-term connection.
Despite the belief that Bitcoin would remain relevant for a long time to come, on-chain data showed that the current bias has been negative. According to Santiment the positive mood outweighed the negative at 923 and 643 respectively.
However, the chart showed that negative sentiment increased while positive sentiment decreased. Therefore, there was a chance that near-term bullish expectations were deviating from the agenda.
Source: Santiment
Additionally, recent investor action was less likely to trigger a significant reaction from BTC. The reason for this was the state of the stock market data in the week that has now ended.
According to Glassnode, there was a close connection between exchange inflow and outflow. The on-chain monitoring platform reported an outflow of $3.3 billion while the inflow was $3.2 billion.
🚨 Weekly on-chain exchange flow 🚨#Bitcoin $BTC
➡️ $3.2 billion
⬅️ $3.3 billion out
📉 Net Flow: -$162.3M#Ethereum $ETH
➡️ $2.4 billion
⬅️ $2.5 billion out
📉 Net Flow: -$76.7M#Tether (ERC20) $USDT
➡️ $3.9 billion
⬅️ $3.7 billion out
📈 Net Flow: +$201.9Mhttps://t.co/dk2HbGwhVw
— Glassnode Alerts (@glassnodealerts) December 5, 2022
With a relatively minimal difference, this meant that Bitcoin has not experienced massive selling pressure. Likewise, the purchasing dynamics did not significantly outperform the compromises. So it’s no surprise that the king only has coins recorded an increase of 1.77% in the last 24 hours.
Bitcoin has been here for a long time
For a further outlook, the data from Glassnode showed that a good percentage of long-term holders were still making profits. This was due to the revelations of the Unspent Transaction Outputs (UTXO). At press time, UTXO’s win percentage was 69.94%. Still, it didn’t negate the fact that younger investors were plunging in the value of their wealth.
Source: Glassnode
Comments are closed.