It seems that Bitcoin correlates with traditional markets over the past month, tightly with the stocks and in our Bitcoin news today, we will try to find out what is causing this movement.
The past week saw billions of dollars getting deleted from the crypto industry’s overall market cap. Bitcoin’s price is down by 8.8% over the past week while ETH god down by 15.4% and BNB crashed by 17.9%. DOGEcoin lost 20% of its value today so all top ten cryptocurrencies by market cap other than Solana, are in the red for the week. The market route tempted a central bank governor to issue another one of these BTC obituaries but the trades could be forgiven for thinking this week is going to be really rad for the BTC price at an exchange. In El Salvador, the entire sovereign government embraced BTC as an official instrument and the total network hash power surged from the expulsion of the miners in China. The hash rate has doubled since the late-June lows.
There has also been a new wave of money pouring capital into BTC and as institutional investors noted, these massive investments are indeed coming from these institutional investors:
“This came from Coinbase, a prominent cryptocurrency platform with a service that essentially acts as a prime broker for institutions. Its first-quarter report revealed that of the $335 billion in trades the company did in Q1 2021, $215 billion came from institutional investors.”
This could also be behind Bitcoin’s price and its crash over the past week despite all of these signs for the blockchain business fundamentals that were perceived as positive. The institutional investors went risk-off this week in qutieis with the major stock indexes all being down for the week. This is what the industry stakeholders are looking for when they start cheering on the institutional adoption of BTC and alogn with all of their capitalizations comes capitulations and BTC becomes heavily correlated roiled like high-tech stocks by the broad market movements.
As Bitcoin correlates with the traditional markets, placing its price against the S&P 500 index’s gains and losses there a clearly the correlation. Of course, BTC has a more dramatic and volatile curve but there’s surely the correlation as you are looking at the charts. Once you add the Dow Jones Industrial Average, UK 100, FTSE 100 Index, and NASDAQ composite, the correlation is further validated. All of these major stock indexes and BTC prices are moving together in sync. Institutional investors are pragmatic and cautious and seek to maximize returns and mitigate losses. As they continue pouring the crypto, traders will have to reevaluate and price in their selling hands.
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