Much to the chagrin of investors, Bitcoin has formed a close correlation to the traditional markets in recent times that has exposed the cryptocurrency to significant downwards momentum throughout the past several weeks.
Although BTC has been able to post some notable gains in recent times as the benchmark stock indices all stabilize, it is important to note that this stability may soon dissolve.
This may come about due to a highly bearish technical sign that the Dow Jones just flashed for the second time ever, leading some analysts to conclude that major downside is imminent.
If Bitcoin maintains its status as a risk-on asset, this looming decline could prove to be dire.
Bitcoin Runs as Stock Market Stabilizes, But Correlation Remains Strong
Bitcoin has been caught within a firm uptrend in the time following the cryptocurrency’s decline to lows of $3,800 in mid-March.
Yesterday, bulls extended this momentum as they pushed the crypto to its post-February crash highs of $7,800 – marking an over 100% climb from its March lows.
This rally has been enabled by the stability and recent recovery seen by the stock market, with the Dow Jones and S&P 500 both recovering significantly from their recent lows.
Currently, Bitcoin is trading up several percent from where it started the year at $7,200, while the S&P 500 is trading down nearly 14% over a YTD period.
In spite of Bitcoin’s strong performance in recent times, it is important to note that it is still generally correlated to the equities market.
This trend is elucidated while looking at data from research platform Skew, which shows that the cryptocurrency is still closely tracking the stock market in spite of its slight outperformance.
Image Courtesy of Skew
Could a Looming Stock Market Collapse Send BTC Reeling?
For the time being, this correlation isn’t stopping Bitcoin from seeing bullish price action, but it is possible that this will soon come to an end.
One popular analyst on Twitter recently pointed out that the Dow Jones just tapped its 200-day ema for the second time in history. The first time was in 2008, with the visit to this level being followed by a violent downturn.
“12 years of data and only two times did the 200ema act as resistance on the weekly. – 2008 – 2020. If history were to repeat, expecting A LOT more blood,” he explained while pointing to the below chart.
Image Courtesy of Teddy
Unless Bitcoin breaks its status as a risk-on asset and begins firmly decoupling from the traditional markets, it may be on the cusp of another major selloff.
Featured image from Unplash. origin »
Key Takeaways
Why are all asset classes rising at once?
Because the U.S. dollar is weakening and investors are chasing both growth and safety.
What does this mean for the economy?
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The Bitcoin Rainbow Chart showed that investors could scoop up more BTC on the cheap.
A deeper look at the sentiment showed that investors might want to wait.
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Bitcoin crossed the $109,000 mark ahead of Trump’s inauguration, driven primarily by Korean market activity.
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Bitcoin kicks off 2025 with selling pressure from US investors, raising concerns about maintaining the $95,000 mark. Key metrics hint at potential bearish trends.
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In contrast to popular bullish sentiments, Bitcoin began October on a bearish note, recording a price decline of over 7% in the first three days of the month. However, while the BTC market experienced an uptick on Friday as data from the US Labor Department indicated incoming rate cuts, investors have generally retained a cautionary approach.
Since reaching its all-time high in March 2024, the value of Bitcoin (BTC) has faltered, failing to sustain a steady upward momentum and dampening investors’ expectations for a major bull rally following its halving event.
If you’re looking for something a little more substantive than a TLDR thread on X, this article is made for you. Much of the content below was the result of discussions with tradfi investors, crypto investors, Bitcoin founders, analysts, and mining executives.
Disappointing flows into bitcoin ETFs over the past days partly resulted from investors trimming risks ahead of Wednesday's FOMC meeting, one market observer said.
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Investors from BCH and ETH are eyeing DeeStream (DST) at $0.035 as the next big investment. Bitcoin Cash and Ethereum are among some of the coins making waves in the market. Investors looking to reinvest the gains from these projects…
Bitcoin (BTC) hitting $50,000—a level last seen in 2021—was enough to send ripples of excitement across the crypto community. With investors calling it the start of a “bull market,” enthusiasm is almost at a frenzy.
Quick Take The summer’s end is ushering in continued sideways price action for Bitcoin, as critical indicators point to a lackluster spot demand. The Coinbase premium index, a barometer of US investors’ buying pressure gauged by CryptoQuant, has taken a nosedive.
BTC's growing dormant supply demonstrated investors' lack of willingness to sell.
Investors' sentiment was tilted towards the negative side, in sync with the low volatility phase.
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ALSO: CoinDesk's market analyst writes that a decrease in the number of bitcoin addresses with a balance of more than 1,000 bitcoins suggests that large, institutional investors are reluctant to add to their coffers.
Losses leading to heavy discounts on assets are always welcome by crypto traders and investors. This time, however, Bitcoin investors seem to maintain a cautious stance as BTC price continued the struggle below the $20,000 mark.
After two consecutive weeks of negative returns, Bitcoin opened on Monday with its head down as investors continued to contemplate the hawkish comments by Fed chair Jeremy Powell.
Bitcoin [BTC] is trading below $20,000 once again after kicking off this week on a bearish note. As a consequence, the level of fear, uncertainty, and doubt has elevated. Investors are now on the fencThe post Ikigai of Bitcoin's $19k level- What its breakdown could mean for investors appeared first on AMBCrypto.
Bitcoin (BTC) is now showing signs of vigor, after weeks of being smothered in crimson, and drilling past the $21,000 level, to the delight of some crypto investors. As of this writing, the most sought after crypto asset is trading at $22,200, up 13% in the last seven days, data from Coingecko show, Friday.
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With the decline in bitcoin prices have come various implications for different types of investors. Retail investors with direct exposure to the market have taken heavy losses, as have the institutional investors.
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Investors saw the crypto market factoring in the geopolitical tensions involving Ukraine and Russia into its cumulative capitalization.
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Bitcoin’s utility as an inflation hedge has been a big push for the adoption of the cryptocurrency by investors. Ethereum on the other hand is fast-rising to become the preferred crypto for hedging against inflation for investors.
The majority of Bitcoin investors see it as a long-term asset. This year, the older generation, baby boomers, also recorded a 16% jump in their interest in BTC while females climbed 6%.
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Following Tuesday’s Bitcoin flash crash, which took the rest of the market down as well, investors are wondering what happened.
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Shark Tank co-judge and chairman of O’Shares ETFs, Kevin O’Leary, has personally invested in bitcoin but he doesn’t think institutional investors and other high-net-worth investors are getting into the market yet.
Guggenheim CIO Scott Minerd has warned crypto investors about bitcoin’s pullback. He said bitcoin “clearly has gotten caught in a speculative bubble that Gamestop got into. ” However, he noted that it will be a “great entry point” for long-term investors.
Gabriel Makhlouf said investors are likely to lose their entire investment as Bitcoin and other cryptocurrencies go to zero.
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JPMorgan has highlighted evidence of institutional demand for bitcoin and investors moving from gold exchange-traded funds (ETFs) to the cryptocurrency. The firm points out that bitcoin demand is driven not only by younger retail investors but also by institutional investors, such as family offices and asset managers.
Grayscale's Michael Sonnenshein explains the possible drivers of the current Bitcoin growth and states that, this year, the company added $2.5 bln of investors' money
Michael Saylor, chief executive of business analytics and mobility software company MicroStrategy, placed a big bet on bitcoin a couple of months ago, and his strategy has paid off big time. The stock is up more than 7% in after-hours trading as investors like what they see.
Lead anchor Oliver Renick, at the end of his six-minute-long market wrapup, claimed that investors are more interested in owning Bitcoin than the equities. He said the cryptocurrency has "a lot to go" since it is the only asset that performed bullish on the positive US stimulus news on Wednesday.
The past few weeks have been gut-wrenching for some investors, with the bitcoin price plunging from $12. 5K highs to sub-$10K and then rebounding above $10,000. But despite the lack of a clear uptrend, institutional investors are still interested in buying the asset.
Bitcoin investors have been on an accumulation spree for quite some time now. Leading up to the halving, investors, both retail and institutional, were HODling the world's largest cryptocurrency.
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