Bitcoin And NASDAQ Show Tight Correlation: What Does This Mean For BTC?
August 23 2024 - 3:30AM
NEWSBTC
Bitcoin, although starting the year with a bang has now been quiet
so far in terms of performance, especially following its peak back
in March. Despite the halving in April of this year, Bitcoin has
experienced modest gains compared to the excitement of previous
years. According to Ecoinmetrics, a platform known for providing
insights into the cryptocurrency market, Bitcoin is up more than
30% year-to-date. In comparison, NASDAQ gained around 20% over the
same period. Related Reading: Bitcoin’s MVRV Ratio Nears Critical
Death Cross: Will The Market See A Bearish Shift? Bitcoin And
NASDAQ: The Tightening Gap Ecoinmetrics shared a chart in its
recent post on X illustrating the narrowing gap and showing how the
year-to-date returns for Bitcoin and the NASDAQ have started to
converge. Earlier in the year, BTC saw a significant return spike,
particularly following the launch of several Bitcoin ETFs in the
US, which boosted BTC prices. However, as the year progressed,
Bitcoin’s performance lost steam, allowing NASDAQ to catch up. This
closing gap between Bitcoin and the NASDAQ suggests that Bitcoin is
becoming more correlated with traditional financial markets. This
shift could have implications for its role as an alternative asset.
The gap between Bitcoin and the NASDAQ is closing. Year-to-date
Bitcoin is up about 34% while the NASDAQ has gained 20%. It’s been
a quiet year for Bitcoin so far. Besides the ETF launch boosting
prices early on there have been no major drivers pushing Bitcoin
forward. pic.twitter.com/LCGf8iuG6d — ecoinometrics
(@ecoinometrics) August 22, 2024 What Does This Mean For BTC?
According to Ecoinmetrics, “We’re now heading into a period of
potential volatility.” This potential volatility could be largely
tied to macroeconomic developments, particularly in the United
States. Historically, Bitcoin has shown sensitivity to changes in
US monetary policy, especially regarding interest rates. Lower
interest rates tend to encourage investment in riskier
assets as the returns on traditional savings and bonds
decrease, making BTC an attractive alternative for investors
seeking higher returns. However, the flip side of this scenario is
the looming risk of a recession, which could dampen investor
enthusiasm and lead to a more cautious market environment.
Ecoinmetrics’ analysis suggests that while Bitcoin has held its
ground so far, its performance in the coming months will be heavily
influenced by the broader economic trend. The Federal Reserve’s
potential rate cuts could provide the liquidity boost needed to
drive Bitcoin higher, but if economic conditions deteriorate, BTC
may struggle to maintain its current trajectory. Related Reading:
Bitcoin Holders Now Doing Loss-Taking: Sign That A Turnaround Is
Near? Meanwhile, BTC is currently up 1.4%, with a trading price of
$60,575 at the time of writing. It is worth noting that before this
current price, the asset had seen a notable spike to trade at
nearly $62,000 earlier today. Featured image created with DALL-E,
Chart from TradingView
Bitcoin (COIN:BTCUSD)
Historical Stock Chart
From Jul 2024 to Aug 2024
Bitcoin (COIN:BTCUSD)
Historical Stock Chart
From Aug 2023 to Aug 2024