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Is Bitcoin (BTC) Detaching Itself From The Stock Market?

Manoj Nair



Bitcoin (BTC)

Bitcoin values have been closely related to tech stocks, and whenever the S & P stocks improved, it led to better performance by BTC. However, there seems to be some change, and the connection between Bitcoin and the stock market has faded. It is a welcome development much preferred by Bitcoiners.

One of the characteristics of the number one crypto asset in the world, with a market cap of $379 billion as of this writing, is that it runs contrary to the established financial regimens. Nasdaq 100 lost 3% in the past three months, while Bitcoin(BTC) gained 1%.

The Relation Between Bitcoin (BTC) And The Stock Market Has Faded

Well-known Bitcoin (BTC) Buff Cameron Winklevoss, the co-founder of Gemini, feels that BTC is no longer following stocks and bonds. Despite the mayhem in the stock market, bitcoin has managed to hold its own, whereas the stock market has lost trillions of dollars. It is an epoch moment, decoupling the Bitcoin fortunes from the stock market. However, it is still unclear whether the bottom has happened. Even though Bitcoin (BTC) has managed to hold its own, there is still no proof that the decoupling happened.

Bitcoin (BTC) Has Performed Better Than Stock Market Indices

As already mentioned, Bitcoin (BTC) values increased by 3%, while at the same time, Nasdaq 100 and S&P 500 have each lost 1%. The exact figure also holds for the past three months, according to data from the blockchain analytics company IntoTheBlock

It is important to note that the current tanking of markets is happening before the interest rate hikes implemented by the Federal Open Market Committee (FOMC) of the Federal Reserve, pushing borrowing rates to their highest level since 2008.

IntoTheBlock’s correlation matrix, the benchmark for correlation between Bitcoin and Nasdaq 100 and the S&P 500, shows a reading of 0.7.

If the correlation shows a reading of -1, it means the two entities which are being correlated will move in the opposite direction. However, a reading of +1 indicates that the two factors will move in the same direction.

In the first week of September, the correlation was 0.9. The risks of a liquidity crunch caused by interest rate hikes put risk assets like cryptocurrencies under extreme pressure. Therefore, the correlation has fallen over the past month; there is reason to believe that it could rise once more.

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