Bitcoin is often described as an alternative to gold. However, BTC’s historical price action may suggest a different scenario. Over the years, the Raja coin remained more closely related to the stock or equity sector. Now the question is, will this relationship continue in the future given the current bloodshed?
Hold my hand
At the time of writing, BTC sentiment was at rock bottom, indicating that the amount of ‘doom and gloom’ surrounding BTC and crypto, in general, is the most negative since “BlackThursday” in March 2020. The weighted sentiment of BTC is reached. The lowest point as seen in the graph below.
In fact, the bitcoin market has now been trading lower for eight consecutive weeks in what is now the longest continuous string of red weekly candles in history. But there may be an opportunity to counter this situation. Basically, to test the above relation.
Notably, on May 23, BTC is down about 4%. However, the equity counterpart (S&P500) had a good day at the office.
Sentiment, Analytical Platform said,
“These two have fluctuated tightly throughout 2022, and this separation may be due to B T c Resistance at $30k. If equities However, keep moving upwards, expect good things for crypto.”
Past data has shown that bitcoin is increasingly tied to the US stock market. Even as crypto’s relationship with the Nasdaq hit a new all-time high two weeks ago. Interestingly, the BTC-Nasdaq correlation increased to a new ATH of over 0.8, per the weekly report by Arcane Research.
Consider the chart below, which shows the trend of bitcoin’s 30-day correlation with the Nasdaq, S&P 500, DXY and Gold over the past few years.
As the correlation has increased in recent months, bitcoin has mirrored the stock market throughout this year. The increasing institutionalization of bitcoin may be behind the increasing correlation with the stock market.
Furthermore, the correlation between bitcoin and the S&P 500 increased to unprecedented levels as the US bond sell-off spread to riskier assets.