Stocks have been mostly up over the past few weeks and so has Bitcoin, which has added 15% over the past month.
After the turmoil and existential angst, digital asset investors are back to focusing on the mood. ACE The stock market is a measure of what the worst can do.
Stocks have been mostly up over the past few weeks and well Bitcoin, which has increased by 15% in the past month. The 90-day correlation coefficient of Bitcoin and the S&P 500, after a bit of weakness in June, is now back at 0.65, among the highest readings in Bloomberg the data goes back to 2010. A coefficient of 1 means that the asset is moving in lockstep, while minus-1 will indicate that it is moving in the opposite direction.
Cryptocurrencies are poised for outperformance “if equities are down,” said Mike McGlone, an analyst at Bloomberg Intelligence. “There are few forces more powerful in the market than when the stock market is falling at a high speed like in the first half. Cryptos are part of the ebb and flow.
That has been restrained all year, with both stocks and crypto moving in the same dress. The background is a hawkish Federal Reserve bent on reducing the four-decade high inflation, which is a source of volatility for all types of assets in 2022.
But whether equity and crypto have reached the bottom is not a question one can make a call with real certainty – the bottom line can only be seen after the fact, and it may come back at the end of this year or even early next year.
Bitcoin’s active address is in a “well-defined downtrend channel,” according to analysts at Glassnode, a crypto researcher. He added that the network’s activity “suggests that there is still new demand.” But at the same time, transactional demand has traded sideways or lower in the past few weeks, indicating that “only a stable base of traders and investors is higher.” And on-chain transaction fees are in bear market territory — seeing an uptick is possible signal of recovery, if so.
“The 2022 bear market has historically been negative for digital assets premises“, the analyst wrote in a record. “However, after a period of sustained risk-on sentiment, the focus will be on a bear market relief rally, or the start of a sustained bullish impulse.”
July is a good time for Bitcoin, Ether and more. Bitcoin rose 27% for the month, the most since October, while the No. 2 added 70% in the best monthly performance since January 2021. Also during that month, the total volume of Tether stablecoin for Bitcoin and Ether rose, according to CryptoCompare, suggesting that investors see them as a safer place in crypto universe.
Of course, even though crypto has rallied in the past few weeks, it can still reach the end of last year. Bitcoin has been hovering around $23,000, down from nearly $69,000 in November. And not even eye-catching developments, including Coinbase’s new partnership with BlackRock, have been able to shake the coin from its stupor and catapult it higher.
“Crypto has more volatility, so it’s more dangerous, and of course investors need to rebuild confidence after the downdraft they experienced,” said Katie Stockton, founder and managing partner of Fairlead Strategies, a research firm focused on technical analysis. . However, he added that while crypto investors take cues from equities, the relationship works both ways. “It seems reasonable because both are risk assets.”