Fresh data showed Bitcoin’s BTC/USD correlation with major U.S. equity indices has fallen to its lowest point in several months.
What Happened: The 30-day Pearson correlation of Bitcoin to the Nasdaq Composite and the S&P 500 has dropped to -0.84 and -0.82, respectively. This marks the lowest levels since November 2023, The Block reported.
Bitcoin’s price has fluctuated between $58,000 and $59,000, while U.S. equity indices have continued their rally. This divergence comes ahead of the U.S. Consumer Price Index (CPI) inflation reading expected on Thursday.
YouHodler Chief of Markets Russian Lienkha attributed Bitcoin’s decoupling from equities to recent sell-pressure events, including the distribution of seized bitcoins by the German and U.S. governments and the Mt. Gox exchange.
Lienkha suggested the current divergence offers potential arbitrage opportunities for traders, given the historical correlation between Bitcoin and the equity market over extended periods.
Also Read: Impact Of Mt Gox, Germany Sales On Bitcoin: ‘Lettuce Hands Are Flushed Out’
Why It Matters: Bitcoin’s price has been under pressure recently due to several factors. On July 8, Bitcoin’s price dropped below $56,000 during the Asian session but has since recovered to $58,000. Analysts have been monitoring macroeconomic trends that could impact Bitcoin’s price.
Bitcoin spot ETFs have been actively buying the dip, with over $200 million in inflows on Tuesday. This buying activity indicates strong institutional interest in Bitcoin despite its recent price fluctuations.
The German government’s liquidation of Bitcoin holdings has also impacted the market, causing a single-day price drop of -3.5%. An analyst estimated a maximum downside of 10% if all the remaining holdings were liquidated.
What’s Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.
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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image created using artificial intelligence with Midjourney.
