Powell said the central bank is prepared to “raise interest rates further over time” if inflation continues to persist at high levels, but analysts were quick to point to other comments, suggesting that a low-interest environment could persist for the future. moment. Operators may have interpreted these comments positively.
The long-standing argument is that Bitcoin is the new “digital gold,” a hedge against inflation and a store of value and that any rate hike could hurt it.
But there are experts who point out that lately Bitcoin has been trading alongside sentiment around the stock market, especially in recent months, as investors adjust to the Federal Reserve’s plans to tighten financial conditions for the first time. Once in almost two years, collect MarketWatch.
As evidence of that trend, the 100-day correlation between Bitcoin and stocks represented by the S&P 500 reached around 0.49 on Tuesday, the highest level since July 2020, according to data from the Dow Jones Market. Furthermore, the 60-day correlation between Bitcoin and S&P 500 reached 0.54, the highest since at least 2010.
Correlation, which refers to the extent to which different assets trade with each other, ranges in magnitude from -1.00 to 1.00. A positive correlation means that the assets have been moving in the same direction, while a negative correlation means that they have moved in the opposite direction.
According to the graph, Bitcoin has maintained a positive correlation with the S&P and Nasdaq Composite since February 2020, respectively, which means that assets have been moving generally in the same direction. It also shows an uptrend in bitcoin’s correlation with the S&P 500 and the Nasdaq Composite since August 2021.
In fact, since early 2021, the correlation coefficient between Bitcoin and the S&P 500 or Nasdaq Composite has been much higher than that between Bitcoin and gold, which has traditionally been viewed as a hedge against inflation. Bitcoin and gold were negatively correlated for various periods.
Analysts point out that more or less since the second half of 2021, Bitcoin has been related to the macroeconomic environment, and its rising or falling price has been influenced by news about the Federal Reserve, the evolution of the coronavirus and inflation expectations , Inter alia.
Even when?
The digital currency touched $ 43,000, up about 7% from Monday’s four-month lows, when it briefly lost the $ 40,000 level. Now, experts are wondering how long the strength of this support will last and, above all, if it is the bottom of the correction.
“We are seeing a battle emerge in the bitcoin market” after the decline earlier this week, said Craig Erlam, an analyst at Oanda. “The cryptocurrency struggled to defend a key support before hitting US $ 43,000 again,” it continues, adding that since then it has returned to around US $ 41,500, to fluctuate between this level and this level. maximum of five days, “which leaves us without knowing where the next move will occur.”
“Clearly there is a lot of support at $ 40,000, but if bitcoin is as sensitive to currency tightening as it sounds, how long can it hold out?” Erlam wondered.
This reflection is shared by other market analysts, who are not deciding whether the US $ 39,650 seen on January 10 is the bottom of the recent correction. “LThe only thing to hold on to right now is the important support it has in the area of $ 40,000 and the origin of the last big bullish impulse: the September lows “, says José María Rodríguez, analyst at ‘Bolsamanía’.
All in all, and despite the volatility of the market, which is commonly consumed by crypto assets, Bitcoin seems to have drawn a price range in early 2022, which invites us to think about a consolidation after losing 40% of its value since the November highs. However, the resistance to overcome resides in the US $ 45,000 to continue with a recovery to the target price of US $ 52,000.
The daily oversold shown by the charts indicates to experts that the digital currency is sending buy signals and that the recent correction has been used by many participants to renew their bullish bets. However, despite the sharp rise on January 11, Many analysts are pessimistic about the short-term outlook for bitcoin, warning that a potential “death cross” on the daily chart has historically been a strong bearish indicator.
Finally, whale movements show unusual caution at this market moment. Compared with the behavior of October and November, they have not yet entered the accumulation phase after the falls, which sends indications that the correction may not have ended.
Source From: Ambito
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