Recent data reveals a significant shift in the correlation between Bitcoin and US stocks. Previously, the flagship crypto had a positive correlation with these stocks, which had a positive impact on both Bitcoin and the broader crypto market. However, data from the market intelligence platform IntoTheBlock now shows that Bitcoin’s correlation with the Nasdaq 100 and S&P 500 has dropped to -0.78 and -0.83, indicating a strong negative correlation where prices move in opposite directions.
According to a Bloomberg report, the correlation between Bitcoin and US equities is “collapsing” due to massive selling pressure faced by the flagship crypto. This pressure, largely caused by entities like the German government, has limited Bitcoin’s upside potential while US stocks continue to trade at all-time highs. The selling pressure intensified in June as Bitcoin miners and the German government began offloading significant amounts of BTC, further widening the disconnect between Bitcoin and US stocks.
The upcoming release of the US Consumer Price Index (CPI) inflation data on July 11 will be a crucial test for both Bitcoin and US stocks. Positive inflation data is expected to trigger a rebound in Bitcoin’s price in the short term, especially as it attempts to reclaim the $60,000 support level. This development could prove to be bullish for Bitcoin and the broader crypto market, showcasing their resilience in the face of changing market dynamics.
As Bitcoin continues to detach from US stocks, investors and traders will need to closely monitor the evolving market dynamics. The ongoing selling pressure faced by Bitcoin, coupled with the potential impact of the CPI inflation data, could shape the future trajectory of both Bitcoin and US stocks. It remains to be seen how these assets will respond to changing market conditions and whether they will regain their previous correlations or continue on separate paths.
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