Recent data indicates a significant shift in the relationship between Bitcoin and US stocks. Previously, Bitcoin had a positive correlation with flagship crypto and these stocks. However, data from the market intelligence platform IntoTheBlock now shows a stark contrast. Bitcoin’s correlation with the Nasdaq 100 and S&P 500 has plummeted to -0.78 and -0.83, respectively. This means that Bitcoin and these assets now have a strong negative correlation, indicating that their prices are moving in opposite directions.
The divergence in trends is evident, with Bitcoin experiencing a major downtrend while the Nasdaq 100 and S&P 500 continue to see substantial rallies. Data from IntoTheBlock reveals that the Nasdaq 100 and S&P 500 have surged by over 7% and 4% in the last month, whereas Bitcoin has witnessed a decline of over 15%. This shift has been attributed to the ‘collapsing’ correlation between Bitcoin and US equities, with selling pressure being a key factor.
According to a Bloomberg report, the diminishing correlation between Bitcoin and US stocks can be linked to the immense selling pressure faced by the flagship crypto. Joshua Lim, co-founder of trading firm Arbelos Markets, highlighted that this pressure, influenced by entities like the German government, has constrained Bitcoin’s upward momentum while US stocks soar to record highs. The selling pressure from Bitcoin miners and the German government has caused Bitcoin to detach from US stocks significantly.
The upcoming release of the US Consumer Price Index (CPI) inflation data on July 11 will put Bitcoin and US stocks to the test once again. This development is expected to have a bullish impact on these assets, particularly Bitcoin and the broader crypto market. In the short term, positive inflation data could trigger a price rebound for Bitcoin, as it aims to reestablish $60,000 as a support level amid changing market dynamics.
The divergence between Bitcoin and US stocks underscores the evolving landscape of the crypto market and the broader financial ecosystem. As Bitcoin continues to break away from traditional market influences, investors and analysts must adapt to these changing correlations to navigate the complexities of the digital asset space effectively.
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