Juni 16, 2023

Bitcoin Falls as Stocks Surge: Correlation at 5-Year Low

Von admin

• The US Federal Reserve’s decision to pause interest rate hikes has led to a surge in the stock market over the past month.
• However, Bitcoin is still trading below $25,000 for the first time in three months, indicating a break in its correlation with stocks.
• This is not the first time that Bitcoin has decoupled from stocks – back in November 2022 it fell while stocks increased off positive inflation readings.

US Federal Reserve Pauses Interest Rate Hikes

The US Federal Reserve this week paused its rate hiking policy after ten consecutive interest rate hikes. The move was nearly unanimously anticipated by the market and movement after the meeting was relatively minimal.

Stock Market Surges Off Soft Forecasts

Despite being 27% below its all-time high from October 2021,the S&P 500 is up 6% in the last 30 days and now only 8.8% off an all-time high. The Nasdaq is up 10% over the same timeframe – that is 15% below its all-time high but a tremendous resurgence considering it shed a third of its value in 2022.

Bitcoin Falls Despite Stock Rally

However, something else isn’t keeping pace with the stock market: Bitcoin is now trading below $25,000 for the first time in three months. Our Head of Research put together a deep dive analysing Bitcoin’s underlying price movement to show how tightly it trades with the stock market – however, as we have seen over this past month something very interesting has happened where we have seen a break in correlation between Bitcoin and stocks surpassing what was seen back in November 2022 amid the FTX collapse when Bitcoin fell to $15k while stocks increased off positive inflation readings.

Break In Correlation Between Stocks and Crypto

Correlation between Bitcoin and the Nasdaq is at its lowest point since 2018 – this indicates that there is indeed a break in correlation between these two assets which stands out against previous episodes such as November 2022 when both assets moved differently despite similar macroeconomic conditions at play during both periods of time..

Crypto Regulatory Crackdown Takes Toll on Price Movement

The US regulatory crackdown spreading fear about crypto’s future may be taking toll on prices as well as investor confidence leading to further decoupling from traditional markets such as stocks which are showing signs of recovering amidst looser financial policies from central banks around world.