Stocks have mostly been up over the past few weeks, and Bitcoin, too, has gained another 15% in the past month.
After experiencing a bout of existential turmoil and suffering, digital asset investors are returning to focus on the mood of WE stock market as a yardstick to gauge whether the worst may be over.
Stocks have mostly been up over the past few weeks and so Bitcoin, has increased by 15% in the past month. Bitcoin’s 90-day correlation coefficient and the S&P 500, after weakening a bit in June, are now hovering around 0.65 again, among the highest readings in the past week. Bloomberg the data goes back to 2010. A factor of 1 means that the contents are moving in a lock step, while subtracting -1 will show they are moving in opposite directions.
Mike McGlone, an analyst at Bloomberg Intelligence, said the cryptocurrency is poised for a better run “if stocks bottom.” “Few forces are stronger in the market than when the stock market fell at such a high rate as in the first half. Cryptos are part of that rising tide. ”
It’s been the theme all year, with both stocks and cryptocurrencies moving similarly fashion. The backdrop is a hawkish Federal Reserve trying to reduce four-decade high inflation, something that has been a source of volatility for all asset classes in 2022.
But whether stocks and cryptocurrencies will hit all-time lows is a question one can call with any real certainty – the bottom can only be felt after the fact, and it is possible that both revisit their lows later this year or even early next year.
Bitcoin’s active addresses are definitely in “a well-defined downtrend channel,” according to analysts at Glassnode, a cryptocurrency researcher. They added that network activity “shows that there is still very little new demand.” But at the same time, trading demand has been flat or lower in recent weeks, suggesting that “only a steady base of investors and traders with higher confidence remains.” And on-chain transaction fees are in bear market territory – if seen a possible increase signal recovery, once it happens.
“The 2022 bear market has a negative history for digital assets spaceAnalysts wrote in a Note. “However, after such a sustained period of risk-on sentiment, attention will turn to whether it is a bear market rally or the beginning of a sustained bullish impulse. .”
July is a great period for Bitcoin, Ether and others. Bitcoin is up 27% for the month, the most since October, while the #2 token is up 70% in its best monthly performance since January 2021. Also during the month, Tether’s total volume stablecoins for Bitcoin and Ether increase, according to CryptoCompare, showing that investors are viewing them as safer places in crypto The universe.
To be sure, even though the cryptocurrency has rallied in recent weeks, it is still at the highest levels reached late last year. Bitcoin has been hovering around $23,000, down from nearly $69,000 in November. And even unflattering developments, including Coinbase’s new partnership with BlackRock, have been able to shake the coin. money from its stupor and propel it higher.
Katie Stockton, founder and managing partner of Fairlead Strategies, a research firm focused on technical analysis, said: “Cryptocurrencies are more volatile so the risk is higher, and there will be implications. That means investors need to rebuild confidence after the downturn they’ve been through. . However, she added that crypto investors are taking cues from stocks, but the relationship works both ways. “It makes sense since both are risky assets.”
