Over the years, Bitcoin has built a reputation as an independent, new-age currency and haven from centralized organizations. However, as large-scale adoption continues, the correlation between Bitcoin and traditional currencies is starting to blur. Variables that influence the price of traditional currencies and stocks are now affecting Bitcoin and altcoins.
Bitcoin’s Correlation to the Global Stock Market Increases
Over the last three months, the relationship ratio between Bitcoin and the stock market, specifically S&P 500, has increased to 0.59. This reflects a mid-range correlation between the BTC and the leading stock. The current changes in both the stock market and Bitcoin are in response to the volatile economic landscape and revolutionary changes in international affairs.
The correlation between Bitcoin and the stock market is most noticeable in the tech sector. Tech-based stocks are moving in a very close pattern to Bitcoin, at a ratio of 0.62. This is well above average since the number that shows the strongest relationship between two assets is 1.
This ongoing trend between Bitcoin and tech stock has led to mixed feelings in the cryptocurrency industry. Some investors feel relieved that Bitcoin is classified at the same level as stocks while others are worried that Bitcoin has lost its immunity against traditional influences.
Bitcoin BTC Experiences May Face Downward Correction
In other news, the price of Bitcoin BTC may face some downward correction against the USD before the uptrend continues. On Friday, Bitcoin rose above $20,000 after taking a deep below $20,000 earlier in the week. Yesterday, the cryptocurrency maintained the bull run, rising above the $21,700 level where it faced some resistance and started correcting lower.
At the time of writing, the price of Bitcoin was $21,427.05. It was down by 0.44% trending within the $21,168.72 and $21,760.28 range. It is not clear how long the correction would last but the $21,168.72 level may serve as support.
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