There is a relationship between macroeconomic conditions and crypto assets like Bitcoin. Harsh and strict conditions will negatively increase the volatility of virtual tokens. This is also the case for equity stocks and their markets.
Last week brought a downtrend to the leading cryptocurrency. Bitcoin has been seen moving towards the $19,000 region without an anchor. The southern movement of the entire crypto market became more severe when the US Federal Reserve released its new rate hike. Also, the equity market is not out of the trend.
Different trends for Crypto and equity markets
But this new week brings a difference in trends between crypto and equity markets. Wall Street has started correction mode for many stocks. There was a sudden meltdown for the 3 major US indices on Monday, September 26, as they posted a 1% correction.
Equity stocks and commodities are down more than 10%, but the MVIS CryptoCompare Digital Assets 100 Index is down 1% over the past month.
Bitcoin and other cryptocurrencies have resisted lower prices in equity markets since the beginning of the week. Instead, prices in the crypto market followed a bearish trend despite all odds. This caused great consternation both inside and outside of space, as the connection to Wall Street failed.
The price of BTC increased at the $20,000 level. This was after the fight last week when BTC hit $19K. Some analysts expect Bitcoin to gradually decline to a 2022 low of $17,500. But the token has made a remarkable move with recoveries for the crypto space.
At the time of writing, BTC is trading at $19,114, indicating that mining has slowed down. Its market capitalization is currently over $387.5 billion. The sudden spike in Bitcoin prices resulted in more than $14 million in short positions.
OnChain College reported On the Bitcoin Mayer Multiple, citing Glassnode data. He noted that many stalls are at historically low levels. Additionally, a comparison with the 200-day moving average shows that Bitcoin is undervalued.
The broader crypto market is experiencing a price rally. In addition to Bitcoin, altcoins such as Ethereum (ETH), Avalanche (AVAX) and Solana (SOL) rose more than 6 percent. This new bullish trend of BTC and other crypto assets has demonstrated the resilience of the crypto market to volatility unlike traditional stocks.
Bitcoin may break its relationship with equity stocks.
This year, the major crypto asset has shown strong correlation with the US equity market. Bitcoin’s price trend was similar to that of the S&P 500. But BTC’s new price spike is breaking the tie, though only time will tell.
Also, there is a risk that Bitcoin well holdings will fall this year. However, some analysts remain neutral despite global macro uncertainties.
On Monday, Katie Stockton, founder of Fairlead Strategies LLC, stated that BTC’s recovery is favorable for short-term metrics. However, many people expect a quick fall in the turmoil and may remain neutral.
Featured Image From zipmex, Charts From Tradingview