I would be really worried if all these trillions QE money would flow to stocks, bonds, real estate, gold. The simultaneous upsurge among Bitcoin, stocks and other risk-on assets could indicate the mainstream considers BTC as an established asset. PlanB, the pseudonymous creator of the stock-to-flow model, said that the short-term correlation between Bitcoin and stocks could be positive. Is short-term correlation necessarily a bad thing? But the striking correlation between Bitcoin and stocks, especially in the second quarter of 2020, shows that investors remain highly uncertain.įrom a double-digit unemployment rate and the struggle to reduce the rate in new virus infections, many factors are preventing a smooth global economic recovery. Source: įor the majority of the past two years, the price of Bitcoin showed little to no correlation with stocks, moving based on its own market dynamic. Bitcoin also saw a strong rejection at $9,700 on the same day, recording a 7% drop in 24 hours.īitcoin falls by 7% in a 24-hour span on June 23, as stocks drop. The Dow Jones saw its first big fall in the week on June 23. ![]() Similarly, the price of Bitcoin fell steeply when the U.S. Without fresh Central Bank liquidity, a challenging global economy, high stock market valuations & increasing covid cases matter again.” “This chart shows that equity investors are addicted to fresh stimulus like a junkie. Referring to a chart displaying the correlation between the S&P 500 and global liquidity, Zschaepitz wrote: But, as liquidity slowed down, various macro risks such as the number of virus infections began to affect investors’ sentiment.Ĭorrelation between the U.S. Holger Zschaepitz, a market analyst at Welt, explained that investors were initially compelled by the Fed’s aggressive injection of liquidity. ![]() All markets are moving cautiously and Bitcoin is no exception equities in recent months raises the probability of a BTC price drop. As the Federal Reserve’s balance sheet started to contract, U.S. While many fundamental factors are causing a stock market downtrend, analysts are pointing at the decline in liquidity as the primary catalyst. As risk-on assets face the fear of a correction, the vulnerability of a near-term Bitcoin ( BTC) price pullback may increase. The Dow Jones plummeted by 2.84% on June 26, recording a 9.27% fall since the month’s peak.
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