Recent data shows that Bitcoin has completely detached from US stocks. This is significant considering how the flagship crypto and these stocks had a positive correlation before now, which undoubtedly positively impacted Bitcoin and the broader crypto market.

Bitcoin Has No Correlation With US Stocks

Data from the market intelligence platform IntoTheBlock shows that Bitcoin’s correlation with the Nasdaq 100 and S&P 500 has dropped to -0.78 and -0.83, respectively. This means that Bitcoin and these assets have a strong negative correlation, with their prices tending to move in opposite directions. 

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Indeed, that has been the case for a while now, seeing as the flagship crypto has been on a major downtrend for a while now. On the other hand, the Nasdaq 100 and S&P 500 have continued to enjoy considerable rallies. Data from IntoTheBlock shows that the Nasdaq 100 and S&P 500 are up over 7% and 4% in the last month, while Bitcoin is down over 15%.

A Bloomberg report also highlighted the “collapsing” correlation between Bitcoin and US equities and attributed this decline to the massive selling pressure the flagship crypto is experiencing. Joshua Lim, co-founder of trading firm Arbelos Markets, told Bloomberg that this selling pressure caused by the likes of the German government has “put a cap” on Bitcoin’s upside while these US stocks trade at all-time highs. 

Data from IntoTheBlock shows that it is indeed this selling pressure that has caused Bitcoin to detach from these US stocks. At the start of June, Bitcoin’s correlation with the Nasdaq 100 and S&P 500 was at 0.86 and 0.73, respectively. However, this strong positive correlation began to drop just as Bitcoin miners began to offload a significant amount of their holdings. Bitcoinist reported that these miners sold over 30,000 BTC in June. 

Bitcoin also witnessed increased selling pressure towards the end of June thanks to the German government, which began to offload some of the bitcoins seized from the pirated movie Movie2k. This selling pressure hasn’t slowed, as the German government has continued its selling spree this month. 

Moment Of Truth For BTC And The Stock Market

Bitcoin and US stocks will again be tested when the US Consumer Price Index (CPI) inflation data is released on July 11. The much-anticipated report is expected to show that inflation in the country is cooling off, further strengthening the case for interest rate cuts. Such development is undoubtedly bullish for these assets, especially Bitcoin and the broader crypto market. 

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In the short term, positive inflation data is expected to spark a rebound for Bitcoin’s price, which is currently trying to reclaim $60,000 as support. Crypto analyst Justin Bennett warned that Bitcoin needs to hold above $57,800 or risks dropping to as low as $50,000. 

Featured image created with Dall.E, chart from Tradingview.com

After facing some strong selling pressure earlier this week, the Bitcoin price has given a surprising 5% reaching all the way to $42,000. As of press time, BTC is trading 4.26% up at $41,809 with a market cap of $819 billion.

Bitcoin Price Catching Up With Equities

In a recent update from on-chain data provider Santiment, Bitcoin’s price has edged above the $42,000 mark, presenting a notable contrast to the relatively reserved performance of altcoins at present. This occurrence coincides with the recent achievement of a new All-Time High (ATH) in the S&P 500 index, fueling the bullish argument for the cryptocurrency market.

The prevailing sentiment suggests that Bitcoin (BTC) and other prominent cryptocurrencies may potentially “regress to the mean,” catching up with the performance of the equities market. Notably, the cryptocurrency sector has exhibited a lag compared to stock markets, a trend that became pronounced starting January 17th when the two markets began diverging in opposite directions.

As the dynamics between crypto and traditional markets continue to unfold, the hypothesis of a potential convergence between Bitcoin and large-cap altcoins with the equities market gains traction, prompting keen observations from market participants.

BTC Can Rally to $43,000

In a recent analysis, prominent crypto analyst Ali Martinez underscores a significant development as the TD Sequential indicator flashes a buy signal on the daily chart for Bitcoin. Concurrently, Bitcoin maintains a favorable position above the 100-day Simple Moving Average (SMA), setting the stage for potential market movements.

Martinez also points to a key scenario where an upward surge past the $40,550 threshold could serve as a catalyst for Bitcoin’s price to reach $43,000. This optimistic outlook is contingent upon the cryptocurrency’s ability to sustain its current position and trigger the anticipated upswing.

However, Martinez also issues a cautionary note, emphasizing the importance of monitoring the 100-day SMA support level. A breach of this support level, according to Martinez, has the potential to lead Bitcoin to a downside target of $33,300.

Furthermore, Martinez reports a notable uptick in active Bitcoin addresses, exceeding the 1 million mark. This surge indicates an increasing level of participation and utilization of Bitcoin (BTC).

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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.