Bitcoin (BTC) wealth is no longer correlated with sentiment in the US stock markets.
The 90-day rolling correlation of changes in the spot price of bitcoin to changes in the Wall Street-heavy stock index, the Nasdaq, and the broader index, the S&P 500, has fallen to near zero. This is the lowest in two years, according to data tracked by crypto derivatives analytics firm Block Scholes.
“He. She [the correlation] It is now at the lowest level observed since July 2021, when BTC was between its double peaks in April and November, Andrew Melville, research analyst at BlockScholes, said in an email.
“The decline in correlation occurred as both assets recovered losses incurred during the tightening cycle last year,” Melville added.
The dwindling correlation with traditional risk assets means that cryptocurrency traders who focus solely on traditional market sentiment and macroeconomic developments could face disappointment.
Recent exchange-traded fund (ETF) filings by BlackRock (BLK), Fidelity, WisdomTree (WT), VanEck, Invesco (IVZ) and others have brought optimism to the cryptocurrency market.
Since BlackRock’s June 15 filing, bitcoin has produced a return of 25%, ignoring the limited range activity in US stock indices.
Per-Ilan Solot, Co-Head of Digital Assets at Marex Solutions, could be the ETF’s narrative disabled into three parts – pre-launch commissioning, live post-site ETF inflows and validation of cryptocurrency as an asset class.
“The influx of investment product in the coming months may be a litmus test for the latter, so I will be watching that closely,” he said. Solot tweeted.
To the astonishment of the bears, investor interest in exchange-traded products has increased since June 15.
Vetle Lunde, senior research analyst at K33, said in a note to clients on Tuesday, discussing the impact of the ETF narrative. “Inflows have been strong across jurisdictions, with all Canadian and European ETPs and US futures ETFs seeing strong inflows.”
While the ETF narrative is currently in the driver’s seat, some macroeconomic factors, such as potential liquidity pressures, still deserve attention, analysts told CoinDesk.
Bitcoin is trading at $30,830 at the time of publication, per CoinDesk data.