Bitcoin price stabilises as tech stock correlation drops to new low
Bitcoin's 20-day correlation with the tech-heavy index NASDAQ-100 has fallen from a relative high of 0.88 in early May to just 0.30.
- Bitcoin's (BTC) total capitalisation stands at AUD$560B while its share of the crypto market is at around 41.5%
- BTC's monthly losses have now climbed to -33%.
- Colombia's incoming president Gustavo Petro has expressed his support for Bitcoin over the last few years.
After having scaled up to a relative high of AUD$31,300, its highest levels since 16 June, Bitcoin has proceeded to showcase a major correction taking its weekly losses to -8.5%. At press time, BTC is trading at AUD$29,353.
This lacklustre price action stems largely from a bear market that has pervaded the equities and commodities sector. For example, the S&P 500 and NASDAQ-100 both recorded gains of approximately 2% earlier today after having dropped 11% of their respective values over the last 3 weeks, an extremely uncommon occurrence within traditional finance. In fact, global stocks are currently witnessing their worst financial quarter in recorded history.
Analysts have noted that Bitcoin's correlation with the stock market has been on the slide, especially with the NASDAQ-100. This could see Bitcoin being traded less like a high-risk asset (such as tech stocks) and more as an independent asset with its own value proposition.
Bitcoin is still hovering around its 200-day moving average (MA), a popular long-term market indicator of an asset's overall health. If the digital currency breaks past the metric within the next 24 hours, experts believe it will surge to price levels that have not been witnessed for multiple weeks. In terms of where Bitcoin may be headed in the near term, Bloomberg's Mike McGlone said:
"Plunging risk assets during the first half of 2022 are taking away inflation at a breakneck pace, which may translate into pre-pandemic deflationary forces resurfacing in the second half of the year. Primary beneficiaries of this scenario may be gold, Bitcoin and US Treasury long bonds."
New Colombian president a fan of Bitcoin
Gustavo Petro, the new president-elect for the South American nation of Colombia, has recently been making multiple sweeping statements in favor of the crypto market, especially Bitcoin. Late last year, he posted the following message on Twitter after El Salvador declared BTC as legal tender within its borders. "Virtual currency is pure information and therefore energy," he stated.
Disclosure: The author owns a range of cryptocurrencies at the time of writing.
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