Recent data has revealed a significant shift in the relationship between Bitcoin and US stocks. The flagship cryptocurrency has completely detached from the Nasdaq 100 and S&P 500, with a correlation of -0.78 and -0.83, respectively. This strong negative correlation indicates that Bitcoin and these assets are now moving in opposite directions.
The decline in correlation between Bitcoin and US equities has been attributed to massive selling pressure faced by the cryptocurrency. This selling pressure, caused by various factors including the German government offloading seized bitcoins, has hindered Bitcoin’s upside potential. Consequently, while US stocks continue to reach all-time highs, Bitcoin has been on a major downtrend.
The correlation between Bitcoin and US stocks began to drop as Bitcoin miners began offloading a significant amount of their holdings. In June alone, miners sold over 30,000 BTC, contributing to the selling pressure faced by the cryptocurrency. This trend continued towards the end of June, with the German government also selling off seized bitcoins from Movie2k.
The upcoming release of the US Consumer Price Index (CPI) inflation data on July 11 will be a crucial test for Bitcoin and US stocks. Positive inflation data is expected to benefit both assets, potentially sparking a rebound in Bitcoin’s price. As Bitcoin attempts to reclaim $60,000 as support, the short-term outlook remains uncertain but optimistic.
Overall, the detachment of Bitcoin from US stocks reflects a complex interplay of factors including selling pressure, miner activity, and macroeconomic indicators. While this shift in correlation may present challenges in the short term, it also offers opportunities for investors to diversify their portfolios and navigate changing market dynamics. As the cryptocurrency market continues to evolve, adapting to these new correlations will be essential for success.
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