Bitcoin rate (BTC) and its correlations: curse or blessing?

By Titus on The Capital

The link between the crypto market and the classic financial market is a double-edged sword. For a strong Bitcoin price, it is crucial that the market has many roots and not just one fixed point.

The Bitcoin price (BTC) slips 0.7 percent on the day to currently $ 9,432. With a 24-hour price range of just under $ 250, the Bitcoin price ranged between $ 9,287 and $ 9,531.

On a weekly basis, the leading cryptocurrency collapses by 4.4 percent. Bitcoin dominance is currently trading in a sideways range between 66.50 percent and 65.65 percentage points. As long as the Bitcoin price does not test its support at 8,500 or its resistance at $ 10,500 and continues to oscillate between $ 9,000 and $ 10,000, the dominance should remain in this sideways phase.

At least since the corona crash, it has been shown that the crypto market sometimes has a strong correlation with the stock markets. If the indices are high, the clock can be set almost according to when the crypto market follows. The same pattern was particularly evident in the opposite direction on “Black Thursday” when the markets fell simultaneously.

The fact that profits and losses of the classic financial markets are emerging in the crypto market shows that the still-young crypto-economy has long since reached the world of large investors. Above all, Bitcoin is increasingly found as a risk asset in the portfolio of the “big ones.”

This is followed by the question of whether this close connection between the markets can promote healthy growth in the crypto market or nip it in the bud. The most recent attempts to decouple the Bitcoin rate from traditional market events have mostly been short-lived.

Market integration has both its advantages and disadvantages. An ongoing correlation could break the narrative of the safe haven asset and store of value in the long run. If Bitcoin declines to a pure “gambler asset” for risk-taking investors, which is thrown away when the opportunity arises, this essentially contradicts the promise of Bitcoin values.

But the latest data speak a different language. Because the increased penetration of institutional investors, who are also active in the stock markets, is evidence of long-term trust rather than a quick thrill kick. The interplay of a growing number of both large and small wallets, increasing BTC accumulation of hedge funds and the transfer of large BTC reserves from exchanges to cold storages for safe custody forms a stable foundation on which the market can thrive.

Hedge fund manager and blockware solutions CEO Matt D’Souza shares this view. In his opinion, the strong correlation to other markets signaled “an expanded range of market participants who own Bitcoin.” Each of these correlations points to “a different use case” of Bitcoin. Accordingly, the different interdependencies also show the different BTC use cases, be it “digital gold, vehicle for capital flight, or a risk asset.”

Matt D’Souza, CPA@mjdsouza2

1) Breaking Down #Bitcoin’s Price Action — Today’s near perfect correlation with US Equities.

What is fascinating about BTC is the multiple short-term correlations that emerge. We have witnessed strong, short term correlations to Gold, to USD/CNY, and most recently US Equities.

The fascinating thing about BTC is the diverse short-term correlations that are emerging. We have seen strong short-term correlations with gold, USD / CNY and more recently with US stocks.

It is precisely in these diverse correlations that D’Souza also has the strength of Bitcoin:

Bitcoin maintains the range of use cases beyond short-term intervals as an overall uncorrelated good — a FEATURE for every portfolio.

Interestingly, the fact that the Bitcoin price correlates with many other markets has the opposite effect. Because the more Bitcoin correlates with different market movements, the more the asset decouples from a single market and could thus benefit from diverse market interdependencies in the long term.

The ether price (ETH) has been down 0.3 percent in the last 24 hours at currently $ 233.66. In a weekly comparison, ether falls by 5.6 percent.

The ripple rate (XRP) collapses 1.4 percent to $ 0.192 over the day. On a weekly basis, the ripple coin posted a minus of 5.2 percent.

The IOTA rate (MIOTA) has dropped 0.4 percent in the last 24 hours to currently $ 0.225. MIOTA has fallen in value by 10 percent within a week.

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