- Bitcoin’s 30-day correlation coefficient with TradFi’s major currencies remained negative.
- Bitcoin’s volatility relative to gold has steadily declined over the past few years.
Sentiment regarding crypto markets and traditional financial markets has diverged dramatically over the past few months. It is noteworthy that developments in one area had no impact on the other.
How much are 1.10.100 BTCs worth today?
The world’s largest cryptocurrency, Bitcoin [BTC]showed increasing decoupling from popular stock indexes like the S&P 500, the Dow Jones Industrial Average and the tech-heavy Nasdaq 100, according to on-chain analytics firm IntoTheBlock.
Bitcoin’s 30-day correlation coefficient with these TradFi guides has remained negative.
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#Bitcoin continues to show a negative correlation with traditional financial markets. Among the major indices, the Dow Jones Industrial Average (DJI) has the clearest negative correlation at -0.8. For detailed insights visit: https://t.co/Wx8RxQwatF pic.twitter.com/Ze8x1yqmte
— IntoTheBlock (@intotheblock) August 4, 2023
When analyzing the recent price action of the companies in question, it became clear that the digital assets and the physical assets were on different wavelengths.
Bitcoin and stocks diverge
The King Coin has been sluggish of late, with the price at press time 0.76% lower than three months ago. After its last significant rally in June, the asset has been stuck in a tight range between $29,000 and $31,000.
Meanwhile, stocks have risen. Big Tech is up 15% over the same period, while the S&P 500 and Dow are up 8.26% and 4.13%, respectively.
Source: IntoTheBlock
Development matters. It is worth noting that both Bitcoin and stocks have long belonged to the risky asset category.
Ryan Grace, head of digital assets at schmackhaftcrypto, attributed Bitcoin’s negative correlation to crypto-specific events such as regulatory headwinds. He pointed out that the lack of an immediate catalyst turns traditional investors away from Bitcoin and cryptocurrencies.
Grace added that the excitement and popularity surrounding AI has also contributed to increased interest in tech stocks over crypto markets.
Is your portfolio green? Check out the BTC profit calculator
Bitcoin as an inflation hedge
In short, trends like this are generally endorsed by proponents of the bitcoin safe haven narrative. When the asset stops responding violently to any real trigger, it could be used as a haven in times of financial risk, much like gold.
Noted on-chain analyst Will Clemente revealed on Twitter how Bitcoin’s volatility has steadily declined relative to gold over the past few years. At the time of writing, “digital gold” volatility was hovering near multi-year lows.
Source: Glassnode
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