While the Bitcoin prices are making investors happy, there are some other aspects which is surprising the market. Notably, the Bitcoin’s decoupling from the traditional finance in recent times is significant highlighting the asset’s independence.
Analysts suggest that some investors are celebrating Bitcoin’s ability to weather macro noise whereas others are not so happy for its lack of participation in the periodic upsides that accompany or price increasing events. However, as Bitcoin investors rejoice the emergence as a non-correlated asset, they are on the watch out for the asset as it reacts less to global macro catalysts than its traditional finance counterparts.
According to data, Bitcoin’s correlation coefficient with the S&P 500, Dow Jones Industrial Average (DJIA), and Nasdaq Composite has declined significantly over 50.5%, 30%, and 49.4% respectively since the start of the year. As reported by Todayq News multiple times over these months, the correlation has kept declining and touched low figures.
On July 5th, the 90-day rolling correlation between Bitcoin’s spot price and the tech-heavy Nasdaq index, as well as the broader S&P 500 index, has plummeted to its lowest level in two years. Correlation coefficients which range from -1 to 1 suggests the effect of certain events on the specified assets. While -1 indicates an inverse pricing relationship 1 indicates a direct one.
BTC’s correlation with gold and the U.S. dollar is 0.33 and -0.23, respectively. The proximity to zero for both implies no pricing relationship at all, ironic given early perceptions of bitcoin as an inflation hedge.
Amid this, events including the regulatory hurdles, clarity over the classification, and the news of the SEC approval of spot exchange-traded funds funds (ETFs) has maintained the crypto market dynamics.
Additionally, the Bitcoin investors have shown interest and looked up to the asset in recent times which also signifies a positive response to the decoupling. Simultaneously, Bitcoin’s most consistently positive pricing relationship has been with Ethereum.
Despite the differences in the two assets’ utility and consensus mechanism, they have traded in relative lockstep and several metrics have showed similar results across these assets. Bitcoin and Ethereum’s independence hint at the maturation of the two assets, with sharp moves directly attributable to asset-specific developments.
According to data from Glassnode, an on-chain analytics firm, number of Bitcoin addresses holding more than 1 coin reached an all-time high level. Data suggests that currently 1,009,396 addresses are holding more than 1 coin.
Notably, this is not an overnight trend and interest as the asset has yielded largely positive results across several metrics. Simultaneously, the exchanges have witnessed large outflows in the past months and exchange balances have come down to record low figures owing to increasing hodling and accumulation.
Also, with the increasing price trails, the assets are emerging as a positive space for ingesting who are on the lookout for alternative investment options. As of writing, Bitcoin is trading at $31,300.40, about a 3.75% increase over the past 5 days and 24% surge over the past month.