- Bitcoin price movement shows that it is moving away from price correlation with the stock market.
- The crypto giant’s trading volume has also increased against the British Pound as the currency underperforms.
- BTC is up by 2%, but the crypto market, which has been controlled by recent financial events, isn’t free.
The crypto market has been correlated with the larger global financial market for the greater part of 2022, with solid signs suggesting a trend reversal.
Bitcoin and other cryptocurrencies have been in the red zone lately as the bear market entered a new week due to recent financial policies. As Central Banks move to curb inflation by increasing interest rates, investors have shifted their risky assets as they now have reduced borrowing power.
The price of Bitcoin rose by 2% to go above the $19,000 resistance level as bulls made a last effort to end the bear market in September. This is a shift away from the BTC and stock market correlation index. While the S&P 500 and Nasdaq are taking the hit due to the Federal Reserve announcing an increase in interest rates by 75 points, the crypto market is taking a new turn.
The number of long-term hodlers of Bitcoin with at least 0.1 BTC has grown this year, contrary to other bear markets. According to Andrew Tu, the head of growth at The Efficient Frontier, “a lot of the players holding crypto now are the stronger hands.” On-chain data suggest that hodlers are positive of a bullish market giving crypto an edge.
The upward movement of BTC has also affected other coins, with Ethereum’s ETH also making a slight rise as bulls set their eyes on $1,300.
Is it possible to de-couple the markets?
Economic trends influence the stock market, and the same has crept into the crypto market with mass adoption by institutional investors. With most investors on the stock market for a long time, they will likely apply that logic to crypto.
Both markets have been primarily correlated since the start of the year, with Bitcoin losing 60% of its value while US stocks have been down by 20% since the start. BTC has not suffered this loss alone as Ethereum (ETH), (XRP), Cardano (ADA), and other virtual currencies took significant losses, leaving commentators with the opinion that in the long run, the digital asset market will influence itself and not ride the waves of the traditional market.