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2 July 2022
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Bitcoin, Ethereum Reach Extremely High Correlation with Stocks, What This Means for Price

According to recent data shared by IntoTheblock analytics, Bitcoin (BTC) and Ethereum (ETH) continue to maintain an extremely high correlation with the stock markets, with the 30-day correlation reaching as high as 0.9.

The thorny conclusion for Bitcoin bulls is that recent crypto market declines cannot be dissociated from the downturn in traditional markets. On Thursday, stock futures were under pressure again, with the S&P500 on the verge of a bear market. Fears that the Federal Reserve’s rate hikes to combat rapid inflation might send the economy into a recession resulted in investors selling stocks.

Stock market correlation

After the Federal Reserve raised interest rates by 50 basis points, or 0.5 percentage points, at its most recent Federal Open Market Committee (FOMC) meeting in May, stocks might be on the edge of a bear market.

Meanwhile, cryptoanalyst Ali Martinez sees that further weakness in ETH might lead to a drop to $700 as the “transaction history shows that 2.24 million addresses bought 26.33 million ETH at $2,300.” Any signs of weakness might encourage these addresses to sell, which could see Ethereum drop to its most important support at $700, where 13.25 million addresses hold 13.1 million ETH.”

Despite the potential for price declines, Bitcoin and Ethereum attract a lot of attention. At the week’s start, El Salvador President Nayib Bukele announced on Twitter a meeting of 32 central banks and 12 financial authorities from 44 countries held on May 16 to discuss financial inclusion and El Salvador’s Bitcoin rollout.

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