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  • Bitcoin’s correlation with gold sinks to two-year low, a warning for investors

    Bitcoin’s correlation with gold sinks to two-year low, a warning for investors

    Key Takeaways

    • Bitcoin’s correlation with gold is at a two-year low
    • Divergence highlights yet again that Bitcoin remains a risk-on asset
    • This may change in the future, but for now, Bitcoin resides on the long-end of the risk spectrum 
    • With full effects of tight monetary policy still to come, market should not get ahead of itself

    Bitcoin’s correlation with gold continues to fall, highlighting the oft-repeated goal of achieving a store-of-value status akin to digital gold remains a long way off for now. 

    We looked into this last month, when the correlation between gold and Bitcoin fell to the lowest value since the FTX collapse in November, an event which sparked mayhem in the crypto markets while the rest of the financial world traded quite placidly, including gold. 

    Since then, the correlation has continued to fall. Indeed, looking at the more volatile 30-day Pearson correlation metric, the relationship is approaching a near-perfect negative one over the past thirty days. The last time it dipped this close to -1 was over two years ago (it nearly hit this level post-FTX also). 

    While the prior metric is a little noisy and bounces around a lot due to the rolling 30-day window sample size, the next chart displays the same indicator but over a 60-day rolling window. Outside of the FTX collapse in November, the 60-day correlation is the lowest it has been in eighteen months, when Russia invaded Ukraine in February 2022 and sparked extreme volatility in the financial markets.

    What does this tell us? Not much, really, beyond what we already know: Bitcoin trades like a risk-on asset. That much has been clear over the past two years or so, as one of the fastest rate hiking cycles in recent history has pulled the rug out from risk assets. The Nasdaq shed a third of its value last year in what was the worst year for stocks since 2008. Bitcoin was far from immune, falling down to a low of $15,500 in the aftermath of the FTX collapse. 

    While the question over whether Bitcoin can decouple from risk assets in the long term remains one of the most intriguing, the numbers make it blindingly obvious that this has not happened to date. The pullback during last year’s bear market also emphatically strikes down any assumption that Bitcoin’s days of violent drawdowns were behind it (we are most definitely not in a “supercycle”), with the fall of over 75% from peak to trough being the fourth-worst in the last decade. 

    The recent dip in correlation follows a turbulent period in the crypto markets. The SEC sued both Binance and Coinbase, the two biggest exchanges on the planet, in the first week of June. Last week, Ripple secured a big win when a (partial) ruling on its two-year battle with the SEC seemed to imply it is not a security (although ambiguity does remain and there will likely be an appeals process). 

    These developments are obviously specific to the crypto markets, and with crypto not yet having a tangible impact on traditional finance markets, the turbulence did not carry over. 

    Additionally, the decoupling of gold and Bitcoin pours cold water on the theory that Bitcoin had already obtained its “hedge” status, which was spoken in some quarters as the asset rose amid the banking wobbles in March. In reality, while this price action was intriguing, it was likely more to do with the market pricing in a lower chance of future interest rate rises, as we discussed here. 

    “In a lot of ways, Bitcoin’s correlation with gold can be viewed as a progress tracker on the path to achieving the holy grail: an uncorrelated store of value for investors”, says Max Coupland, director of CoinJournal. “With this correlation dipping to a two-year low, it is clear there is a long way to go yet. Bitcoin remains highly susceptible to the whims of the stock market and the macro economy, and that is worth bearing in mind for investors amid the recent rise in crypto valuations”. 

    Remember, last year represented the first time in Bitcoin’s history that it observed a pullback in the stock market. Prior to that, it was humming along in the longest and most explosive bull markets in history, kicked off almost to the day when Bitcoin was launched (the stock market bottomed in March 2009, two months after the genesis block was mined). 

    All in all, Bitcoin is still trading like a risk asset, and it has experienced the pain of that label in the past eighteen months as interest rates have spiked aggressively. While it is up over 80% thus far in 2023, it remains 56% off its peak from November 2021. 

    Nonetheless, things are undoubtedly brighter today than they were nine months ago, when FTX collapsed and the world seemed destined for a gruesome recession. While that recession still may come (and indeed the prospect of lagged effects of tightened monetary policy loom large), economic indicators have been remarkably resilient while hopes of a soft landing have risen. 

    Personally, I fear the market may be getting ahead of itself, but what do I know? The sheer scale of rising from a zero-rate environment to a climate where T-bills are paying north of 5% is ferocious, and won’t be shrugged off lightly. Indeed, looking at previous cycles throughout history, the stock market has tended to pull back further after hikes have ended. 

    While past performance is never indicative of the future, it certainly should provide food for thought, as phrases such as “meme stock”, “altcoin” and “robinhood” creep back into the vernacular. 

    But whatever happens, the charts are clear: Bitcoin is still a risk-on asset. That means if the blood does hit the streets, gold will strongly outperform its digital cousin. Maybe that will change one day, but for now, the numbers don’t lie. 

    If you use our data, then we would appreciate a link back to https://coinjournal.net. Crediting our work with a link helps us to keep providing you with data analysis research.

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  • Bitcoin’s correlation with Nasdaq 100 shrinks to 3-year low

    Bitcoin’s correlation with Nasdaq 100 shrinks to 3-year low

    • Bitcoin’s correlation with the Nasdaq 100 has fallen to just 3% in June, down from the overall 60% in 2022.
    • BTC price has outperformed the stock index year-to-date and over the past year.
    • Bitcoin price jumped to a year high last week after news of a spot Bitcoin ETF application by global asset manager BlackRock.

    Bitcoin’s correlation with tech stocks has declined sharply over the past few months, more so after the benchmark cryptocurrency’s rally to a new year-to-date price this month.

    According to an analysis published by market data research platform Kaiko released today, June 26, BTC has continued to break its correlation with the Nasdaq. 

    Kaiko researchers note that in June, Bitcoin’s and the Nasdaq 100 trading trajectory diverged to currently sit at just 3% correlation.

    Bitcoin outperformed Nasdaq 100 in June

    The falling correlation, according to Kaiko, has been enhanced by the cryptocurrency’s double digit gains in June.

    In this, BTC outperformed the tech equities’ 3%. While the Nasdaq 100 has gained about 35% year-to-date, its managed only 22% in the past year. BTC on the other hand is up more than 108% YTD and over 72% over the past year, even with the sell-offs occasioned by the collapse of TerraUSD and FTX in 2022.

    It’s a performance that has seen the lockstep trading witnessed in the second half of last year shrink from 60%, the Kaiko analysts pointed out. 

    CoinJournal analyst Dan Ashmore also recently looked at the fading correlation between the top crypto asset and stocks, examining the whys. 

    BlackRock ETF news major bullish catalyst

    On current outlook, Bitcoin has outperformed traditional risk assets even after a negative sentiment permeated the market following the US Securities and Exchange Commission (SEC) regulatory actions against Binance and Coinbase. Earlier, BTC had performed much better as stocks floundered amid the banking sector turmoil.

    And just this past week, as equities broke their winning streak on new macroeconomic fears, Bitcoin led the crypto market higher – fueled by news of BlackRock’s ETF filing. BTC currently sits around $30,260, down 1% in the past 24 hours, but still up by over 15% in the past seven days.

    CoinShares’ Chief Strategy Officer Meltem Demirors notes that together with BlackRock, companies with a combined $27 trillion in client assets are working to offer customers access to the crypto asset class.

    But while the Blackrock-inspired ETF frenzy remains a key bullish catalyst, other metrics such as open interest suggest growing inflows and speculation. Bitcoin bulls holding above the psychological $30k level or bouncing from fresh retest below that could form the next leg for BTC price upside action.

    As highlighted here, the $34k level is increasingly looking as the next major hurdle for BTC in the short term.

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  • Don’t be fooled by Bitcoin’s recent calm, volatility is coming: Opinion

    Don’t be fooled by Bitcoin’s recent calm, volatility is coming: Opinion

    Key Takeaways

    • Bitcoin has been tightly range-bound for last month, its 10% fall this week its biggest move since the banking crisis
    • Dan Ashmore, our Head of Research, warns that volatility will return before long
    • Over 50% of stablecoins have left exchanges and orderbooks are thin, he writes, meaning there is less needed to move the price
    • T-bills paying 5% have pulled capital from the space, leaving Bitcoin more open to big price moves
    • Direction will depend on interest rate policy, with economy at crucial juncture

    Bitcoin has pulled back over the last week, the orange coin dipping 10% from just north of $30,000 to $27,200. But the remarkable thing about this price move is how unremarkable it is. 

    Bitcoin has been extremely tightly bound since the banking crisis subsided over the last month, its daily moves notably gentle compared to its usual extreme volatility. This relatively benign 10% move – Bitcoin has printed a 10% candle in seconds before – amounts to the largest move since the banking crisis subsided and Bitcoin propelled upwards as interest rate forecasts softened. 

    In fact, when you plot the average of the last 30 days of price moves, this past month is now close to flat, but history shows that it has never stayed around that placid level for long. 

    We can be particularly certain that volatility will return this time around. That is because one of the key factors in heightened volatility is as prominent as ever in the Bitcoin markets: a lack of liquidity. 

    With less liquidity, there is less money needed to move prices. And right now, liquidity is as thin as it has been in quite a while. 

    Since the exit of Alameda in the aftermath of the disastrous FTX collapse, order books have been shallow. Looking at stablecoin balances on exchanges is another indicator of this. I put together a deep dive recently analysing the extraordinary outflow of stablecoins from exchanges: 45% of the total balance has fled exchanges in the last four months. The updated figure is over 50% of stablecoins gone since December. 

    In a world where interest rates have ballooned at the fastest rate in recent memory, while yields in the crypto space fall, perhaps this is not surprising. T-bills are now paying over 5%, while crypto investors have seen countless blowups in the space – Celsius, Terra and FTX – while sentiment has collapsed and fear flooded the market. 

    When there is a US government-guaranteed investment paying 5.1%, why would anyone hold a stablecoin with the risks that flooded the market over the last year?

    And so, while Bitcoin has been trotting a relatively peaceful path over the past month, the party on the charts will return before long. With thin liquidity comes heightened volatility, meaning if there is a trigger in the market, Bitcoin’s price could very likely move further than what it otherwise would. 

    In fact, looking at the volatility metrics, while it has dipped in the last two weeks, realised volatility was the highest since June 2022 earlier this month. So while the price moves have been cancelling each other out as Bitcoin oscillates within a tight window, counter-intuitively, the volatility is still high. 

    The trillion-dollar question, of course, is which direction will it go.

    I’m not smart enough to predict that with any degree of confidence in the short term, but whichever way it moves, it will depend on macro conditions. Bitcoin continues to hold the stock market’s hand, its correlation with the tech-heavy Nasdaq especially high. 

    With financial markets still so dependent on interest rates, the word of Jerome Powell and the Federal Reserve will remain key. Backing out probabilities from Fed futures, the market seems to be betting that the Fed has perhaps one more hike in it before shutting up show on this period of tight monetary policy. 

    As we saw last month with the banking crisis, this plan could change quickly. It really is a macro climate of unprecedented nature, this mix of high inflation and generationally quick rate hikes, even if coming from such a low base. 

    Risk assets will have their day again, it’s just a question of when. In the short term, it is hard to say, but whichever way the sentiment goes, don’t expect Bitcoin to remain asleep for very long. 

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  • 1 in every 138 Bitcoins are now owned by MicroStrategy, but it doesn’t make much sense

    1 in every 138 Bitcoins are now owned by MicroStrategy, but it doesn’t make much sense

    Key Takeaways

    • MicroStrategy has purchased another thousand Bitcoin, taking their holdings to 140,000 at an average price of $28K
    • The total investment is now $4.2 billion, with the company’s fate tied to the Bitcoin price
    • CEO Saylor remains ultra-bullish, but has no regard for risk management
    • For investors, someone may as well just purchase Bitcoin directly

    MicroStrategy is at it again. 

    The software company, which is now essentially a Bitcoin-holding company, has purchased another 1,045 Bitcoin. The company now holds 140,000 coins, with Michael Saylor’s now-trademark Twitter post announcing the latest investment to the world Wednesday. 

    MicroStrategy’s 140,000 stash of Bitcoins is the largest holding of any public company. It constitutes 0.72% of the entire supply, meaning they own 1 in every 138 Bitcoins currently in circulation. 

    A long way to go to Satoshi Nakamoto and his/her approximate stash of 1 million coins (5.2% of the supply), but Saylor is on his way. 

    The latest purchase was locked in at average price of $28,016 per Bitcoin, bringing the average price to $29,803, meaning the company is slightly underwater on the $4.17 billion investment.

    Michael Saylor doesn’t do risk management

    CEO Saylor’s conviction remains unwavering, while his disdain for portfolio diversification is also unchanged. For me, regardless of your thoughts on Bitcoin as an investment, it is difficult to get on board with an investment of this scale. 

    The risk is extreme, with the fate of the company now well and truly in the hands of the capricious crypto gods. A look at the share price action shows how tightly correlated it now is with Bitcoin. MicroStrategy shed three-quarters of its value last year as Bitcoin plummeted amid the bear market, but has doubled this year as Bitcoin has bounced back. 

    Saylor’s conviction may be admirable, but his risk management not. This is especially pertinent when looking at his rhetoric regarding advising people on what to do with their funds – again, nothing to do with Bitcoin, but the failure to understand the risk tolerance and financial circumstances of everyday people is jarring:

    “Take all your money and buy Bitcoin. Then take all your time to figure out how to borrow more money to buy more Bitcoin. Then take all your time to figure out what you can sell to buy Bitcoin. 

    And if you absolutely love the thing and don’t want to sell it, go mortgage your house and buy Bitcoin with it. And if you’ve got a business that you love because your family works for the business – if it’s been in the family for 37 years and you can’t bear to sell it – mortgage it, finance it and convert the proceeds into the hardest form of money on earth, which is Bitcoin”

    The interview occurred in March 2021. Bitcoin was trading north of $56,000 at the time, approximately double what it is currently. I sincerely hope that nobody listened to his advice of this billionaire and mortgaged their house or business. 

    And again, this is not a discussion on the merits or price of Bitcoin. The same logic would hold if Bitcoin was now $200,000 per coin. Not that it needs to be said, but for the record, mortgaging your future and your entire financial well-being on one asset – and especially one as volatile as Bitcoin- is, well, not smart. 

    Nonetheless, Saylor is intent on doing this with MicroStrategy. At least that is a little less perilous than betting one’s own personal future. But the reality is that with such a large investment – $4.17 billion! – MicroStrategy is now a Bitcoin holding company. 

    For investors, I am not sure what the appeal is here, as one can just buy Bitcoin directly. For Saylor, however, he doesn’t seem to care. He’s all in.

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  • Bitcoin’s break to $25k was fueled by massive liquidations

    Bitcoin’s break to $25k was fueled by massive liquidations

    • Bitcoin price broke above $22,500 to new highs above $25,000 amid the hunt for short stops and liquidations.
    • The move to $25k resulted from short liquidations of over $155 million.
    • While price could retreat to $24k, Bitfinex analysts say recent price movements could be indicative of a bottom.

    Bitcoin price rose above $25k briefly before slipping back under the key psychological and technical area. 

    According to analysts at crypto exchange Bitfinex, the retreat to this week’s lows comes after a 10% upswing and a green weekly candle. However, the benchmark crypto did not hit a crucial daily candle close at that zone.

    Even then, it is likely the price movement is another major step towards “the latter stages of a gruesome bear market,” the analysts noted in a report.

    BTC spike to $25k fueled by massive liquidations

    Bitfinex analysts also suggest that Bitcoin’s breakout from the $22,500 price level to highs above $25,000 was fueled by the massive liquidations recorded over the past few days.

    Commenting on BTC price outlook and what could lie awake in coming weeks, they said in a statement shared with CoinJournal.

    “Over the past two weeks, the BTC price has been hunting both over-leveraged long positions, as well as liquidating over-eager shorts of over $155 million. It reached an eight-month high of $25,000 in the process. Another sharp but short-lived pullback caught out some short-term bullish speculators off-guard who were betting on a push to the upper $25,000-$26,000s on Thursday, February 16th, as evidenced by a spike in long position liquidations on that day. Profit-taking in the wake of the recent rally and a stop-run on those who had gotten overly aggressive chasing the upside might well send Bitcoin back below $24,000 in the week ahead.”

    On what happens next, the analysts say price action as has played out recently has historically, resulted in ranged price movement. This is due to the action that has seen both longs and shorts have been simultaneously wiped off.

    “The most probable move going forward is to scale out of positions partially and wait for the range to form without a strong directional bias,” they explained.

    In a tweeted prediction for Bitcoin price, YouTuber and crypto analyst Sheldon The Sniper says Bitcoin could go to $28k or revisit support at $21k. He shared the outlook above as BTC price continued to hover around $25,683 at 2:15 pm ET on Tuesday.

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  • Bitcoin’s Lightning Network capacity surges to all-time

    Bitcoin’s Lightning Network capacity surges to all-time

    • Lightning Network has reached over 5,490 in Bitcoin payments capacity, an all-time high.
    • Transactions in BTC on the layer-2 payments network have increased roughly 63% since January 2022.
    • The increased Bitcoin micropayments via Lightning Network comes as BTC price retreats below $23k after a great rally to start 2023.

    Lightning Network’s capacity in terms of Bitcoin across payment channels has hit a new all-time high, according to the latest data on usage for this major payment network.

    The Block Research shows the critical layer-2 network, which is built on Bitcoin, has seen its capacity grow to over 5,490 BTC. That’s nearly 160 BTC more than what was observed on 4 February 2023, according to details shared by Lightning Network statistics.

    Lightning Network capacity up 63% since January 2022

    The benefits of the Lightning Network technology, mainly around fast and low-cost micropayments, has increasingly attracted more people. According to the data, Lightning Network’s capacity in BTC terms is up approximately 63% since January 2022.

    Approximately 3,350 bitcoin was recorded in payment channels on the protocol on 1 January last year. From the figures, it’s clear that total network value has declined compared to when Bitcoin price hit an all-time high in November 2021. The value of current Lightning Network capacity in USD is around $128 million – down from more than $216 million when BTC raced to highs of $69,000.

    But as the on-chain metrics for the payment network’s daily usage shows, there has been continuous adoption even as the crypto winter saw crypto prices crash. Bitcoin is currently trading above $22,700 after a brief rally last week ended with bears mounting a wall near $24,000.

    According to data from CoinGecko, BTC price remains roughly 67% off the ATH of $69.044 reached on 10 November 2021. In comparison, (as noted above) LN capacity has increased 63% since January 2022. 

    Find out more about Lightning Network here.

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  • Nearly 13 million bitcoins have not moved in over a year, an all-time high

    Nearly 13 million bitcoins have not moved in over a year, an all-time high

    Key Takeaways

    • An all-time high of 12.7 million bitcoins have not moved in over a year
    • That translates to two-thirds of the circulating supply
    • Only 7% of bitcoins have moved in the last month
    • History shows that long-term holders tend to rise as price falls, which may seem counter-intuitive
    • The real story is a little more nuanced, as falling trade volumes in bear markets provide a lurking variable which affects the data

     

    One of the intriguing things about blockchain is the public availability of all sorts of stats about the network.

    A lot is made of the fixed supply cap of Bitcoin, with the final supply of 21 million bitcoins slated to be hit by 2140. Bulls use this as a case in point as to why the asset is programmed to expand in price, as its scarcity will inevitably squeeze the asset upwards.

    By looking on-chain here at https://coinjournal.net/, we noticed a quirk in this data.

    Long-term holders continue to grow

    Despite the bloodbath that was cryptocurrency in the year 2022, long-term holders have continued to accumulate. Out of the 19.27 million bitcoins currently in circulation, 12.77 million bitcoins have not moved in over a year – an all-time high.

    It’s a pretty significant number. In the following chart, I have plotted these bitcoins against two other categories: firstly, bitcoins that have moved in the last month (traders), and secondly, bitcoins that have not moved in over a month but have moved within the last year (medium-term holders).

    Currently, we have 66% of bitcoins unmoved in over a year – again, an all-time high. The previous high was in September 2020 when the mark hit 63%. Prior to that, the previous high was April 2016 at 60%. 

    A further 27% of bitcoins have not moved in the last month, while the remaining 7% can be seen as traded bitcoins, moving around the blockchain in the last month.

    Why are long term holders growing?

    The obvious question is, why? Why are we seeing long-term holders growing so substantially when the market has been getting pummelled?

    Well, I decided to chart the percentage of long term holders against the bitcoin price. And the result is quite interesting – there definitely seems to be at least a moderate inverse relationship between price and long-term holders. That is, when price falls, long-term holders rise. Hmm.

    But in truth, this makes sense. As the price falls, volumes and interest in the market tend to dry up. With that, comes less trading, and by definition less holders under the one-month threshold.

    While the narrative of long-term holders soaking up increasing amounts of the Bitcoin supply is often painted in a bullish light, I’m not sure that tells the whole story when considering this historical pattern.

    Sure, it is a positive thing that the number of bitcoins that have not moved in more than one year are climbing, as it does show that these long-term holders have tended not to capitulate during the drawdowns.

    But a healthy trading market and high liquidity is associated with a bull market, which is part of the reason we are seeing an inverse relationship here. Look no further than trading volume in 2022, which fell 46% on centralised exchanges compared to the previous year – that’s trillions of dollars of activity no longer present.

    “Trading volumes have cratered across the crypto space. This has pulled down activity and it’s not surprising that the portion of bitcoins traded recently is therefore falling. The analysis of long-term holders is a more nuanced issue than the crude assumption that ‘more bitcoins in long-term wallets is bullish and therefore price will go up’. That is simply not what we have seen historically” said Max Coupland, Director of CoinJournal.

    I’ll continue to monitor all on-chain activity, as the market is certainly showing more life in these early stages of 2023, with softer inflation data giving impetus to the market that we may pivot off high interest rates sooner than previously expected. It will be interesting to keep tabs on the dynamics on-chain, therefore.

    But next time somebody declares it obviously bullish that there are less bitcoins being flung around the markets, perhaps remember that the situation is a little more complex than that.

    If you use our data, then we would appreciate a link back to https://coinjournal.net. Crediting our work with a link helps us to keep providing you with data analysis research.

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  • Bitcoin’s “hedge” narrative is dead, as speculative price action continues

    Bitcoin’s “hedge” narrative is dead, as speculative price action continues

    Key Takeaways

    • Crypto has risen to start the year off the back of expectations that interest rates may be cut sooner than anticipated
    • This contrasts with the view that crypto is uncorrelated, proving it false
    • Assessing the price action of crypto through the pandemic and subsequent rate-raising cycle shows an extremely risky asset class that moves in line with other speculative asset classes

    Over the last couple of months, markets have turned green off the back of inflation data softening around the globe. Crypto hasn’t been left off the invite list, with digital assets surging to their strongest rally in 9 months.

    If there was ever any doubt (and by now, there really shouldn’t be), this proves once and for all that any narrative around crypto being an uncorrelated asset is dead.

    Pandemic bull run

    To quickly recap on the last few years in cryptoland, the asset class initially moved violently upward as central banks worldwide pursued ultra-low interest rate policy.

    As economies ground to a halt for the ultimate black swan, the COVID-19 pandemic, nations faced a highly uncertain outlook in Q1 of 2020. With lockdowns sweeping the world, central banks were forced to do what they could to stimulate these abruptly-shut societies. 

    Out came stimulus packages of an unprecedented scale. 

    With all this stimulus and generationally cheap money, risk assets went bananas. The biggest leader of all was cryptocurrency. Some argued that the assets were rising as a result of the inevitable inflation that would result from all this expansionary monetary policy, as crypto was a hedge against the fiat system. The argument wouldn’t hold.

    The transition to a new interest rate paradigm

    The year 2022 did indeed bring a spike in inflation, and this time central banks were forced to do the opposite – aggressively hike rates as the cost of living spiralled relentlessly.

    This has reined in risk assets, as per the playbook. Liquidity is sucked out of the system, suppressing demand. Investors now have alternate vehicles in which to park their wealth and earn a yield, with government-guaranteed T-bills now offering reasonable alternatives, as opposed to the zero rates previously (or negative in some nations).

    But cryptocurrency followed the rest of the world’s risk assets down. Not only that, but the scale of the meltdown in the sector was unlike anything we have seen in a major asset class in a long time. Bitcoin shaved over three-quarters of its market cap, and it came out favourably compared to altcoins, many of which were decimated.

    And now, the last couple of months have brought more optimistic readings regarding inflation. The numbers are still scary, but just a little bit of positivity has crept in that the worst may have passed. Of course, there is still a war ongoing in Europe and now fear has elevated that a recession may be imminent (if not here already), but hey – let’s celebrate whatever wins we can.  

    The stock market has cautiously crept upwards, as the market moves to the expectation that high interest rates will cease sooner than previously expected.

    The only thing is, crypto has also risen. Not only that, but it has printed gains which blow the moves in equity markets out of the water.

    Which, you know, kind of suggests that this may not be an inflation hedge at all. As inflation comes back down and the likelihood of lower rates and another expansionary period grows, crypto rises. Go figure.

    Correlation vs stock market remains high

    The proof is in the pudding. It is pretty clear by simply looking at the price chart of S&P 500 vs Bitcoin that the correlation here is stark – with the key lurking variable being interest rates. 

    Quite literally, crypto is the opposite of an uncorrelated asset – it has moved in lockstep with the stock market for the last few years. 

    Interestingly, there have been periods of decoupling, however. Unfortunately, they have come amid crypto-specific crashes. To show this, I plotted the Bitcoin/S&P 500 correlation against the Bitcoin price over the last couple of years. 

    The correlation has been high, aside from a few noticeable periods – all occurring when the Bitcoin price plummeted. The most recent example was November 2022, when crypto wobbled amid the FTX crash. 

    There really is no debate here. Crypto is a highly correlated, extreme-risk asset. The only question is whether it can shed this moniker in the long term. But any thought contesting that it is not currently wildly speculative is wide of the mark.

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  • Bitcoin’s recovery will depend on a lot of macro-activities affecting the market, says Dan Ashmore

    Bitcoin’s recovery will depend on a lot of macro-activities affecting the market, says Dan Ashmore

    • Coinjournal’s Dan Ashmore says numerous factors, including inflation and rate hikes, have affected the prices of most cryptocurrencies.

    • He told CNBC that Bitcoin’s recovery would depend on numerous macro events affecting the market.

    • Bitcoin and the broader crypto market have lost more than 65% of their value since the all-time high of November 2021.

    Bitcoin’s recovery will not happen overnight

    Dan Ashmore, a cryptocurrency analyst at Coinjournal, told CNBC in a recent interview that the price recovery of cryptocurrencies will not happen overnight. When commenting about the price collapse last year, Ashmore said;

    “Entering 2022, we were at the tail-end of one of the longest and most explosive Bull Runs in recent memory. And then the world is gripped by this inflation crisis post-pandemic. We also experienced one of the swiftest rate hike cycles in recent memories. That sucked the liquidity out of all these risky assets. It is not overly surprising that we have seen this massive pullback.”

    The macro climate will play a role in market recovery 

    At press time, the price of Bitcoin stands at $21,163, down by more than 60% from the all-time high. While commenting on the possibility of price recovery, Ashmore said the macro climate would play a huge role in that regard. He said;

    “In the last month or so, we have seen slightly more positive readings. It still has a long way to go, but it is brighter than it looked a month or two ago. We still have a long way to go before we get back to that $69,000 all-time high. This is not going to be an overnight process.”

    He added that the rise depends on a whole range of variables in the macro climate going our way. Furthermore, the avoidance of incidents such as the LUNA, FTX, and Celsius crashes could help boost the market in the long term.

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  • Analyst charts Bitcoin’s potential rally to $25K by March

    Analyst charts Bitcoin’s potential rally to $25K by March

    • Bitcoin price broke above $21,440 on major cryptocurrency exchanges for the first time since the FTX implosion.
    • Much of the buying pressure was retail driven as crypto mirrored stock markets’ Friday surge.
    • Veteran trader and markets analyst Peter Brandt has shared his prediction for Bitcoin price in 2023.

    Cryptocurrencies roared into the weekend as Bitcoin price spiked to highs above $21,000 for the first time since FTX’s debacle began to unfold in November.

    Data from CoinGecko shows that the benchmark crypto hit prices near $21,450 on major crypto exchanges on Sunday, with major altcoins tracking the leading digital asset. Ethereum broke above $1,500, Solana jumped to trade at highs of $24 and Dogecoin rose as high as $0.088. 

    It’s notable that the rise in crypto prices followed a tick up for growth stocks and risk assets as the US inflation slowed further in December to suggest a potential pivot from the Federal Reserve.

    Bitcoin price rally- analyst points to $25K by March

    Bitcoin is up more than 22% in the past seven days, with BTC currently showing resilience above the $20,000 support level.

    While on-chain data indicates the weekend buying pressure wasn’t so much as institutional investor-driven, the potential for bitcoin going higher remains if prices consolidate above the psychological level.

    According to veteran trader and markets analyst Peter Brandt, BTC’s bullish trend will benefit from a weekly close above $20,800. He shared the prediction in a tweet.

    The seasoned trader predicts a run to major resistance at $25,000 by March, with rejection seeing BTC retest the $18,000 level. If bulls hold this level, the analyst forecasts another sharp rally that could end up with Bitcoin price testing resistance levels around the $35,000 mark by July 2023.

    Although he warns that no one can predict the markets with certainty, his long term outlook for Bitcoin has the cryptocurrency’s price above $100,000 by 2025.

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