According to data from blockchain research firm BlockScholes, the 90-day rolling correlation of bitcoin spot price changes with changes in the technology-selective Nasdaq and the S&P 500 index has declined to near zero.
Andrew Melville, a research analyst at BlockScholes, points out that this correlation with US equities is in the lowest level since July 2021, when BTC was “between its twin peaks in April and November.” “The drop in correlation has occurred as both assets have recovered the losses suffered during the tightening cycle of last year“Melville said.
Added to this thesis is the cryptocurrency market analysis firm Kaiko, which highlights that the correlation between the queen cryptocurrency and the Nasdaq fell to 3% in June… although both trajectories have been clearly bullish.
The Silicon Valley Effect
On the one hand, bitcoin rose in the second half of June from below US$25,000 to US$31,389.54, annual highs for the largest digital asset in the world, thanks to the boost received by the ETFs from BlackRock, Fidelity and other companies. On the other hand, The technological selective continued with its escalation fueled by artificial intelligence (AI) values, which has allowed this index to rise more than 30% in the first half of the year.
According to data from Kaiko, the 30-day BTC-Nasdaq correlation started the year at 60% and fell to 22% in March, coinciding with the crash of Silicon Valley Bank (SVB), which boosted the price of cryptocurrency reigns. The fall up to the end of June has been very notable and abrupt, since this indicator continued to be around 20% at the end of May.
For Ben Laidler, global markets strategist at eToro, this drop in the correlation between tech stocks and bitcoin makes the latest gains “exclusively crypto.” This circumstance, he indicates, “is positive after the” winter “of 2022 and before the next ‘halving’ of bitcoin and future regulatory clarity, including the implementation of MiCA in the EU.”
Similarly, this expert believes that the attack by the Securities and Exchange Commission (SEC) against numerous ‘altcoins’ such as Cardano (ADA) or Solana (SOL), which defined “securities” in the lawsuits filed against Binance and Coinbase, “punched a gap” in altcoin performance and investors fled to the “safe haven” of bitcoin in the midst of this storm.”
“Counter-intuitively, the SEC’s action opened the door for more institutional participation, which saw an opportunity to buy bitcoin at a significant discount,” Laidler adds.
It should be noted that the S&P agency noted in a report published last May that it was difficult to justify a correlation between cryptocurrencies and various economic factors such as inflation or equities.
“In theory, crypto assets could be a hedge against inflation. However, the history of cryptocurrencies is probably too short to prove it,” they pointed out from the New York firm. In this sense, they pointed out that this belief could come from the “comparatively strong” adoption of cryptocurrencies in “certain emerging markets that suffer from high inflation and a rapid depreciation of the local currency” as is the case of El Salvador.
Source: Ambito
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