Recent data has revealed a significant shift in the relationship between Bitcoin and US stocks. Previously, these assets exhibited a positive correlation, leading to a beneficial impact on the cryptocurrency market. However, according to information from the market intelligence platform IntoTheBlock, Bitcoin’s correlation with the Nasdaq 100 and S&P 500 has now plummeted to -0.78 and -0.83, respectively. This drastic change indicates a strong negative correlation, with prices moving in opposite directions.
The divergence between Bitcoin and US equities has been particularly evident in recent market movements. While Bitcoin has been experiencing a prolonged downtrend, the Nasdaq 100 and S&P 500 have been enjoying significant rallies. Data from IntoTheBlock shows that the Nasdaq 100 and S&P 500 have surged by over 7% and 4% in the last month, whereas Bitcoin has plummeted by more than 15%.
Various factors have been identified as contributing to the detachment between Bitcoin and US stocks. One significant factor is the intense selling pressure that Bitcoin has been facing, resulting in a cap on its upward potential. According to Joshua Lim, co-founder of trading firm Arbelos Markets, this selling pressure has been instigated by entities like the German government, thereby hindering Bitcoin’s performance while US stocks reach record highs.
The impact of selling pressure on Bitcoin’s correlation with US equities has been substantial. At the beginning of June, Bitcoin’s correlation with the Nasdaq 100 and S&P 500 stood at 0.86 and 0.73, respectively. However, as Bitcoin miners began offloading a significant portion of their holdings, this correlation started to decline. Reports indicated that over 30,000 BTC were sold by miners in June, further exacerbating the selling pressure on Bitcoin.
Looking ahead, both Bitcoin and US stocks face a critical test with the release of the US Consumer Price Index (CPI) inflation data on July 11. This upcoming development is poised to impact these assets significantly, particularly benefiting Bitcoin and the broader crypto market. Positive inflation data is expected to trigger a price rebound for Bitcoin in the short term, as the cryptocurrency aims to reclaim the $60,000 support level.
The growing disconnect between Bitcoin and US stocks underscores the evolving dynamics of the financial markets. As these assets continue to follow divergent paths, investors and analysts must closely monitor the changing correlations and external factors influencing their performance.