The correlation between the surging US equity markets and Bitcoin (BTC), the world’s largest cryptocurrency, has been deteriorating in recent months. This is due to a combination excess supply, and weak demand, which has caused a price decline of over 20% from the June highs of $70,000.
Bitcoin correlation with Nasdaq100
According Bloomberg reports that the 90-day coefficient of correlation between Bitcoin and Nasdaq 100 dropped on Tuesday to 0.21, its lowest value since May 1. This drop reflects more than a 50% decrease in correlation during the past two month.
Experts attribute the decoupling of these markets to several reasons. “idiosyncratic” Bitcoin supply events. Joshua Lim is the founder of Arbelos Markets and explains the current state of Bitcoin. spot sales from seized BTC The German and US government held a joint meeting in the last month to discuss the recent distribution of funds by Mt. Gox.
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The following are some of the ways to get in touch with us. reported NewsBTC has reported that Bitcoin’s recent decline from its high in March of $73,700, was made worse by the Mt. Gox’s administrators are returning approximately $9 billion of tokens back to creditor.
German authorities have also sold half of the BTC that they seized on a pirate web site in January. This has added to the selling pressure we saw last month.
Manuel Villegas, Julius Baer’s research analyst, emphasises the oversupply as being the main factor in the current market. market confidence. Villegas said:
It is anticipated that the excess token supply would reach central exchanges by 2019. next In the coming days, prices are expected to rise. A looming overhang of supply has been the primary factor in affecting confidence.
Miner Capitulation & Falling Profits
Bitcoin Miners are also under pressure because of these issues. sell tokens due to declining profitability.
They are the ones who deal with the Bitcoin blockchain. financial The fallout from the April riots Halving eventThis reduced the amount of tokens miner receives for their mining activity.
Some miners have responded by selling some BTC inventory in order to reduce their operating expenses based on fiat. Data CryptoQuant, a crypto-analytics firm, shows FTX conditions post collapse with FTX levels of December 2022. The hashrate dropped 7.7%.
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Bloomberg estimated that miners’ average cost-of-production is $54,500. Miners might need to take action if prices drop below this level. liquidate Some tokens are held to cover operating expenses.
Finality, the Mt. Gox distribution and miner’s selling pressure increased the level of uncertainty among investors. This further affected BTC’s recovery.
BTC, at the time this article was written, had recovered the level of $57,850. It has risen over 2% within the last 24 hours.
Chart from TradingView.com, image from DALLE
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Source: www.newsbtc.com