July 10 Crypto News – Bitcoin’s Correlation with US Equities Hits Multi-Month Low
July 10 Crypto News – Bitcoin’s correlation with the Nasdaq Composite and S&P 500 has reached a multi-month low. Bitcoin’s 30-day Pearson correlation with the Nasdaq is at -0.84, while this correlation with the S&P 500 is at -0.82; This trend is in line with a recent Bloomberg report that noted that the 90-day correlation coefficient between Bitcoin and the Nasdaq 100 index dropped to 0.21, also marking a multi-month low.
Market Movements and Trends
Data charts show a significant decline in the correlation between Bitcoin and major US stock indices since early June. During this period, Bitcoin rose to $71,000 before pulling back. Bitcoin is currently trading in a tight range between $58,000 and $59,000; This is in contrast to the sustained multi-month rise in stock indexes, which was supported by anticipation ahead of the US Consumer Price Index (CPI) inflation reading.
Economic Indicators and Futures Markets
Economists anticipate a slight drop in June’s CPI year-over-year headline reading, reflecting in pre-market movements where S&P 500 futures climbed 0.074% and Nasdaq 100 futures rose by 0.29%. Meanwhile, European equity indices also showed gains, with the European Stoxx 600 index increasing 2.94 points to 514.70 despite political uncertainties in France.
Decoupling Dynamics
Russian Lienkha, Chief of Markets at YouHodler, attributes bitcoin’s decoupling from equities to recent sell-pressure events. Factors include sell-offs by the German and U.S. governments of seized bitcoins and the distribution of assets from the defunct Mt. Gox exchange among creditors. Lienkha predicts a potential recovery in bitcoin’s price, despite possible dips into the $50,000 to $52,000 range, citing these pressures as temporary.
Trading Opportunities
Lienkha highlights arbitrage opportunities arising from the divergence between bitcoin and the S&P 500, noting potential gains for traders leveraging long-term correlations between the cryptocurrency and equity markets.
This analysis underscores the evolving dynamics between bitcoin and U.S. equities, influenced by economic indicators and institutional actions, shaping trading strategies amidst fluctuating market sentiments.
FAQs about Bitcoin’s Correlation with US Equities
Why has Bitcoin’s correlation with the Nasdaq and S&P 500 dropped to a multi-month low?
Bitcoin’s correlation with these indices has decreased due to recent market dynamics and sell-pressure events affecting the cryptocurrency.
What does a negative correlation mean between Bitcoin and US equities?
A negative correlation suggests that when US equity markets move in one direction, Bitcoin tends to move in the opposite direction, highlighting a diversification opportunity for investors.
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