- Bitcoin’s correlation to US stocks and bonds has increased this month.
- This is due to an increase in institutional investor exposure to the crypto asset.
Over the past two weeks, the correlation between Bitcoin [BTC] and prices of U.S. stocks and investment-grade bonds are up 40% and 33%, respectively, research firm Kaiko found.
📈BTC correlation to U.S. stocks and investment-grade bond prices rose to 40% and 33%, respectively, in August. 👀🤔 pic.twitter.com/MK2tKI08uI
— Kaiko (@KaikoData) August 15, 2023
This suggests that when the prices of US stocks move, the price of BTC moves in the same direction about 40% of the time on average.
Similarly, a 30% correlation between the king coin and investment grade bonds suggests a moderate statistical relationship. This means that changes in bond prices can coincide with changes in BTC prices about 33% of the time.
Read Bitcoin [BTC] Price forecast 2023-2024
Avengers, gather!
Typically, the correlation between BTC and these traditional financial assets increases as institutional investors intensify their accumulation of or exposure to the leading crypto asset. An assessment of their behavior over the past month showed that interest among this cohort of investors was on the rise.
A review of BTC’s fund market premium metrics revealed an increase in investors’ eagerness over the past 30 days to put their money into investment assets (BTC trusts) that derive their price from the coin’s price movements.
Fund Market Premium refers to the difference between a fund’s market price and its net asset value (NAV). A fund market premium can occur when investors are willing to pay more for a fund than its net asset value.
This can be due to various factors such as fund performance, investment strategy or general market sentiment.
BTC’s Fund Market Premium tracks institutional investor interest in BTC trust. Data from CryptoQuant showed growth in this metric, suggesting that despite BTC’s limited price movement, investors have remained steadfast in their beliefs.
Source: CryptoQuant
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Coinbase is missing in action
While Coinbase is the largest cryptocurrency exchange in the US, most institutional investor activity in the region over the past month has not taken place on the platform.
A look at Bitcoin’s Coinbase Premium Index (CPI) revealed a steady decline into negative territory over the period under review, data from CryptoQuant showed.
The CPI is a metric that measures the difference between an asset’s price on Coinbase and its price on Binance. When an asset’s CPI value is positive, it indicates strong buying pressure among institutional investors on Coinbase.
Conversely, when the CPI metric returns a negative value, less accumulation activity is happening on Coinbase.
A month ago, BTC’s CPI was 0.05. At the time of writing, it was spotted at -0.10.
Source: CryptoQuant