Ever since bitcoin lost around 80% of its value from its all-time high, it has been questioned as a store of value and digital counterpart to gold. The digital currency still has the best performance of any asset over the past decade, but critics are quick to point to the past year’s losses.
However, Bitcoin could regain control of its narrative as the digital version of gold, the cryptocurrency, outperformed legacy financial markets and managed to keep the bears off its current levels. At the time of writing, the price of BTC is trading at $20,000 with a 4% gain in the last 24 hours.
BTC price is moving sideways on the 4-hour chart. Source: BTCUSDT trade view
Bitcoin holds the line as stocks trend lower
Data from Arthur Hayes, founder of crypto exchange BitMEX, shows a growing correlation between Bitcoin and major stock indices. As the US Federal Reserve (Fed) changed monetary policy to curb inflation, risky financial assets began to move in tandem.
So when traditional markets collapsed, Bitcoin followed. This has been the status quo for several months as the Fed becomes more aggressive and continues to hike rates, pushing stocks and BTC to fresh multi-year lows.
Hayes claims that the 30-day correlation between BTC and Nasdaq has been hot up and “trending in the wrong direction.” However, in short time windows, the decoupling of the two assets takes shape.
As seen below, the 10-day correlation between Bitcoin and the Nasdaq 100, one of the world’s major stock indexes, is declining and moving down. Hayes rated this performance as “good”; He believes that once BTC and another crypto can trade on their own, they will be able to outperform stocks and start another bull run.
Source: Arthur Hayes via Twitter
Is BTC Price Starting a Bullish Rise?
As mentioned earlier, bitcoin seems to be starting to behave as predicted. Additional data from Arcane Research shows that the price of BTC outperformed the stock market in the month of September despite the ongoing turmoil in financial markets.
As can be seen in the chart below, the number one cryptocurrency by market cap saw no losses this month. The dominant trend was neutral and sideways. Meanwhile, the Nasdaq 100 and S&P 500 lost 9% and 8%, respectively, over the same period.
Here’s how Arcane Research found how BTC and Hold managed to hold their value while global markets trended lower:
Amid this macro turmoil, gold has held up relatively well, falling 3%, in line with Bitcoin’s performance. For the past two years, Bitcoin has closely followed the stock market, but with higher volatility (…). Bitcoin’s recent outperformance versus the stock market during a downturn offers some hope for investors who cling to the digital gold narrative.
It remains to be seen if the current bullish momentum in BTC price will see some continuation or if investors will get less stuck and let their hopes rise as the cryptocurrency continues to follow legacy markets.
Source: Arcane Research
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