SP 500 and Crypto Markets Aligned by Macroeconomic Factors, Reveals Bloomberg
According to Bloomberg statistics, there is a positive link between cryptocurrencies and the S&P 500 that has not been observed since mid-2022. The strong correlation between the price fluctuations of the two markets suggests that the macroeconomic factors that drive U.S. stocks also have a major effect on the cryptocurrency industry.
The S&P 500 and the index of the top 100 cryptocurrencies have a 40-day correlation coefficient that is currently at 0.67. It was only higher in the second quarter of 2022, when it was 0.72, according to a Bloomberg analysis. Bitcoin dropped to roughly $19,000 in the second quarter of 2022, coinciding with the S&P 500’s slump to 3,674.84 points. The equity index has increased by 35% since then, hitting a record high of 5702.55 points today. Since then, bitcoin’s price has risen to more than $63,500, a 69% increase.
FalconX: Strong Bitcoin-S&P 500 Correlation May Fuel Next Crypto Bull Market
Bloomberg’s analysis is consistent with a recent report by David Han and David Duong of Coinbase, who estimated that there is a marginally greater correlation between Bitcoin and the S&P 500 at 0.69. One implies a perfect positive connection with a correlation value of 1. As indications point to a possible soft landing for the US economy, FalconX Head of Research David Lawant said the strong correlation between equities and cryptocurrencies is expected to endure. A situation like this arises when monetary policy successfully reduces inflation while maintaining economic expansion and preventing a downturn.
Correlations between crypto prices and broad risk asset indices have been on the rise and are likely to remain elevated for a while. The combination of a favourable election outcome and a more favourable liquidity environment for risk assets could start the next crypto bull market,
Lawant
Chris Rhine: Kamala Harris’ Crypto Stance Could Boost Market Sentiment and Regulation
Chris Rhine, Portfolio Manager at Galaxy and Head of Liquid Active Strategies, emphasized how the consolidation of risk assets and cryptocurrencies has put both markets up for future growth. He pointed out that there are more positive triggers than negative ones, especially since risk assets responded favorably to the Federal Reserve‘s most recent 50 basis-point rate cut and because the relaxation of monetary policy has caused digital asset prices to rise as expected.
Optimism is building that Vice President Kamala Harris’ stance on crypto will be more favorable than the Biden administration’s policies, offering a more optimistic regulatory and legislative roadmap for the industry. It is very likely that more large wealth management platforms will approve Bitcoin ETFs in early Q4, further expanding access to digital assets across the trillions of dollars of wealth managed by brokerage firms,
Rhine
For more up-to-date crypto news, you can follow Crypto Data Space.
Leave a comment