Bitcoin “out of phase” from the stock market, but the price is still falling

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2022-05-29 03:09:52

The degree of correlation between Bitcoin (BTC) and the US stock market has decreased in the past time, but in a direction that is not favorable for the price of BTC.

Bitcoin “out of phase” from the stock market, but the price is still falling

According to the statistics of Bloombergthe correlation between the Nasdaq stock index and Bitcoin (BTC) price since early May has shown a marked divergence.

Specifically, while BTC price corrected from $38,800 to $26,700 in May and continued to trend downward, the NASDAQ index recovered from under 12,000 to 12,500 points and tended to rise.

Bitcoin price volatility correlation (black) with the Nasdaq index (orange). Source: Bloomberg

Looking back from January to the end of April, it can be seen that Bitcoin and NASDAQ prices have always “go hand in hand” with each other, leading to many arguments that Bitcoin has been dominated by large financial institutions / investment funds and must now follow the movement of the stock prices of these institutions, as reflected by the NASDAQ.

However, the actual reason may be that the Fed’s recent interest rate hikes have both made the US dollar stronger and dragged down the price of BTC, while also causing the cost of borrowing in the US to increase and negatively affect them. to the development activities of American businesses, confusing Bitcoin and NASDAQ together.

In May, a major crypto crash occurred with the collapse of the LUNA-UST pattern, resulting in a massive sell-off that hit the market, sending BTC prices further down. Meanwhile, US stocks were unaffected by the news and are slowly recovering as the pressure from the Fed wears off.

Bitcoin is also on the way to a 9-week series of red candles, for the first time ever. BTC in On the evening of May 26, there was a time when it was pushed to the threshold of $ 28,019, before recovering to the zone of $28,700 – $29,000. The world’s largest cryptocurrency is still keeping a safe distance from the 2022 bottom of $ 26,700, set on May 12 – a time when the market dumped heavily because of the collapse of LUNA-UST.

1W graph of BTC/USDT pair on Binance exchange at 08:25 AM on May 28, 2022

Answer the interview BloombergFiona Cincotta, senior analyst from City Index, commented:

“This is not the phase shift that Bitcoin advocates want to see. Even so, I don’t think Nasdaq and Bitcoin will no longer be correlated. The problem is that Bitcoin only follows Nasdaq when the price drops.”

The correlation between NASDAQ and Bitcoin has been shown for a long time. In an analysis published in April, former BitMEX CEO Arthur Hayes addressed that issue and forecast that the crypto market will bottom in Q2/2022.

Similar to BTC, the world’s second largest cryptocurrency, Ethereum (ETH) is also “going down”, but in addition to the two factors raising interest rates and LUNA-UST mentioned above, ETH also suffered damage because of the increase in interest rates. Level The Merge encountered not one but two technical problems.

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