Recent data shows that Bitcoin has completely detached from US stocks. This is significant considering how the flagship crypto and these stocks had a positive correlation before now, which undoubtedly positively impacted Bitcoin and the broader crypto market.
Bitcoin Has No Correlation With US Stocks
Data from the market intelligence platform IntoTheBlock shows that Bitcoin’s correlation with the Nasdaq 100 and S&P 500 has dropped to -0.78 and -0.83, respectively. This means that Bitcoin and these assets have a strong negative correlation, with their prices tending to move in opposite directions.
Indeed, that has been the case for a while now, seeing as the flagship crypto has been on a major downtrend for a while now. On the other hand, the Nasdaq 100 and S&P 500 have continued to enjoy considerable rallies. Data from IntoTheBlock shows that the Nasdaq 100 and S&P 500 are up over 7% and 4% in the last month, while Bitcoin is down over 15%.
A Bloomberg report also highlighted the “collapsing” correlation between Bitcoin and US equities and attributed this decline to the massive selling pressure the flagship crypto is experiencing. Joshua Lim, co-founder of trading firm Arbelos Markets, told Bloomberg that this selling pressure caused by the likes of the German government has “put a cap” on Bitcoin’s upside while these US stocks trade at all-time highs.
Data from IntoTheBlock shows that it is indeed this selling pressure that has caused Bitcoin to detach from these US stocks. At the start of June, Bitcoin’s correlation with the Nasdaq 100 and S&P 500 was at 0.86 and 0.73, respectively. However, this strong positive correlation began to drop just as Bitcoin miners began to offload a significant amount of their holdings. Bitcoinist reported that these miners sold over 30,000 BTC in June.
Bitcoin also witnessed increased selling pressure towards the end of June thanks to the German government, which began to offload some of the bitcoins seized from the pirated movie Movie2k. This selling pressure hasn’t slowed, as the German government has continued its selling spree this month.
Moment Of Truth For BTC And The Stock Market
Bitcoin and US stocks will again be tested when the US Consumer Price Index (CPI) inflation data is released on July 11. The much-anticipated report is expected to show that inflation in the country is cooling off, further strengthening the case for interest rate cuts. Such development is undoubtedly bullish for these assets, especially Bitcoin and the broader crypto market.
In the short term, positive inflation data is expected to spark a rebound for Bitcoin’s price, which is currently trying to reclaim $60,000 as support. Crypto analyst Justin Bennett warned that Bitcoin needs to hold above $57,800 or risks dropping to as low as $50,000.
Source: NewsBTC