Nov. 1 (Reuters) – After months of tears and tantrums, Bitcoin wants a split with the stock market.
Closely associated with tech stocks for most of 2022’s ferocious period, cryptocurrencies are staged one of the strongest efforts to break away yet.
30-day correlation with Nasdaq (.IXIC) It fell to 0.26 last week, the lowest level since early January, and a reading of 1 indicates the two assets are moving in lockstep.
The correlation, which shows how well the two movements are in sync over the 30-day period, hovers above 0.75 for most of the year, and sometimes approaches perfect agreement at 0.96 and 0.93 in May and September. .
For some crypto advocates, the split of Bitcoin from Big Tech is a sign of strength.
“The latter growth has been absorbed somewhat, and investors are looking for the next growth industries. Bitcoin and cryptocurrencies are among those ‘next’ growth industries,” said Web3 Gaming Ecosystem. One FITCHIN CEO, Santiago Portela, said:
The early split really coincides with a period of relatively calm consolidation for teenage cryptocurrencies, a year after it began to plummet from its high of $69,000 last November.
Bitcoin is hovering near a one-month high around $20,500, gaining more than 5% over the past week, outpacing Nasdaq’s 2% gain in Microsoft’s quarterly result. (MSFT.O)alphabet (GOOGL.O)meta (META.O) and Amazon (AMZN.O) weight.
HODLERS reaching out
However, winters in the Crypto were cold and hard.
According to CoinMarketCap.com, cryptocurrency market capitalization has shrunk by more than two-thirds to $984 billion from about $3 trillion in November 2021.
Market participation has also declined, with average daily trading volume for digital asset products dropping to $61.3 million as of Oct. 25, lower than seen last November, according to data from CryptoCompare. That’s a far cry from about $700 million.
Nevertheless, months of continued selling failed to shake the old hands digging in despite the tough economic backdrop.
According to blockchain data firm Glassnode, dollar assets held in bitcoin that haven’t been traded in more than three months are at an all-time high, indicating accumulation by long-term holders or “HODLers.” The group of avid cryptocurrency investors got their name from a trader misspelling “hold” on his forums online many years ago.
Additionally, according to analytics platform CryptoQuant, a record 55,000 bitcoins were withdrawn from the largest exchange Binance on Oct. 26, showing a flow that typically indicates coins are being moved to wallets for long-term storage. it was done.
“BTC’s owner base has changed dramatically from being heavily weighted by speculators who entered in 2021 to a cult-like ‘HODLer’ community that will not sell BTC in almost any macro situation. We did,” said Stéphane Ouellette. He is the CEO of crypto derivatives provider FRNT Financial.
“The market is now looking to next week’s Fed meeting for further confirmation of the breakdown of the correlation between risk assets and BTC.”
What’s next for fickle bitcoin?
Samuel Reed, CEO of consulting firm Geometric Energy Corporation, said the massive outflow of funds from exchanges could indicate that some big buyers are “sniffing” the end of the bear market. said to be sexual.
Still, no one knows if fickle bitcoin will start to rally, make a new drop, or quickly rebound and embrace tech stocks.
For the foreseeable future, macroeconomics will continue to drive markets that remain highly speculative in nature.
Alex Miller, CEO of blockchain firm Hiro Systems, said, “The more speculative cryptocurrencies are, the more they are linked to the macro.”
“It comes back to what is the use case of the asset, what is the production capacity of the asset.
(The article is amended at paragraph 12 to say that the market value of cryptocurrencies has shrunk by two-thirds instead of one-third over the past year.)
Reporting by Medha Singh and Lisa Pauline Mattackal of Bengaluru. Additional reporting by his Alun John in London. Edited by Vidya Ranganathan and Pravin Char
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