A NEW HISTORY IN BTC ERA MORE TO KNOW
The never-ending debate over whether Bitcoin (BTC) is a commodity like gold or a risky investment could escalate as the cryptocurrency's stock market sensitivity soars amid fears that the Fed's tightening plans could jeopardize the US economy. falling.
The 90-day correlation between Bitcoin and the Wall Street benchmark S&P 500 rose to 0.49% on Friday, the highest since October 2020, according to
"The relationship between Bitcoin and the S&P 500 has only been high for five days in BTC history, indicating that the current consolidation regime has never been seen in BTC history," according to the weekly Arcane Research newspaper published Tuesday.
Consolidation has intensified with the ongoing tightening of the U.S. Treasury yields, which is an indication that the Fed may be having a hard time avoiding the much-feared high rate of rapid interest rate rise without deteriorating the economy. The yield curve, which is expected to spread between the 10 and 2 year yields, is now only 20 points (bp) short of volatility, an indicator of economic downturn.
Therefore, the long-held crypto market belief that bitcoin is a digital platform is yet to come true.
"I wish I could say that crypto is really responding to the basics [inflation], but I think the important thing here is that crypto responds to inflation," said Marc Chandler, managing director and chief marketing officer at Bannockburn Global. Forex, told CoinDesk TV when asked about the recent rise of bitcoin.
The cryptocurrency has risen by 8% since the Fed raised borrowing costs by 25bp last Wednesday and raised inflation forecasts. The move wonders if investors are investing in cryptocurrency to deal with inflation.
However, the rise seems to have been fueled by an uptick in the stock market. The S&P 500 is up 6% from the Fed upside and the tech-heavy Nasdaq index is up 8.7%, according to data provided by TradingView's marriage platform.
"What I am interested in is the bitcoin exchange and the change in Nasdaq and what you find is the correlation is over 60%," Chandler said. "The stock market [has been] a bid."
According to Noelle Acheson, head of market data at CoinDesk's sister company, Genesis Global Trading, macroeconomic and global uncertainty seem to be preventing bitcoin from drawing price bills.
"One of the main reasons for the uncertainty. Bitcoin is a volatile asset, and in times of uncertainty, exploiting that volatility - which is often a factor, not a hindrance - is hard enough to drive away even the most experienced traders. This is particularly tense in today's market. it is difficult to predict the outcome when we do not know whether the news from the conflict zone is reliable, "Acheson said in a LinkedIn post.
"The perception of rates is also a source of significant market uncertainty, as last week's increase of 25bp will not cause inflation that is already hurting consumer pockets, let alone future," Acheson said.
Bitcoin last appeared to be close to $ 42,180, representing a decline of 0.8% per day. As of late January, cryptocurrency was limited between $ 36,000 to $ 45,000.
According to Acheson, bitcoin needs "either a renewed speculation or a new macro investment to be able to move out of the current range."