Recent data shows that Bitcoin has completely broken away from US stocks. This is important considering that the flagship crypto and these stocks previously had a positive correlation, which undoubtedly had a positive impact on Bitcoin and the broader crypto market.
Bitcoin has no correlation with US stocks
Facts of the market information platform IntoTheBlock shows that Bitcoin’s correlation with the Nasdaq 100 and S&P 500 has fallen to -0.78 and -0.83, respectively. This means that Bitcoin and these assets have a strong negative correlation, with their prices tending to move in opposite directions.
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That has indeed been the case for a while, as the flagship crypto has been in a major downtrend for a while now. On the other hand, the Nasdaq 100 and the S&P 500 continued to make significant rallies. Data from IntoTheBlock shows that the Nasdaq 100 and the S&P 500 have risen more than 7% and 4% in recent years. last monthwhile Bitcoin is down more than 15%.
A Bloomberg report also highlighted the “collapsing” correlation between Bitcoin and US stocks and attributed this decline to the massive selling pressure the flagship crypto is experiencing. Joshua Lim, co-founder of trading firm Arbelos Markets, told Bloomberg that this selling pressure, caused by factors including the German government has put a “cap” on Bitcoin’s upside while these US stocks are trading at record highs.
Data from IntoTheBlock shows that it is indeed this selling pressure that has caused Bitcoin to break away from these US stocks. In early June, Bitcoin’s correlation with the Nasdaq 100 and S&P 500 was 0.86 and 0.73, respectively. However, this strong positive correlation began to decline just as Bitcoin miners began divesting a significant portion of their holdings. Bitcoinist reported that these miners sold over 30,000 BTC in June.
Bitcoin also witnessed increased selling pressure in late June thanks to the German government, which started offloading some of the bitcoins from the pirated movie Movie2k. This selling pressure has not abated as the German government has continued it sales frenzy this month.
Moment of truth for BTC and the stock market
Bitcoin and US Stocks Will Be Tested Again When the US Consumer Price Index (CPI) inflation data will be released on July 11. The long-awaited report is expected to show that inflation in the country is cooling, further strengthening the case for rate cuts. Such a development is undoubtedly bullish for these assets, especially Bitcoin and the broader crypto market.
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In the short term, positive inflation data is expected to trigger a recovery in Bitcoin’s price, which is currently being attempted Recover $60,000 as support. Crypto analyst Justin Bennett warned that Bitcoin must hold above $57,800 or risk falling as low as $50,000.
Featured image created with Dall.E, chart from Tradingview.com
