Bitcoin Defies Global Market Trends: Negative Correlation Hits Pre-Pandemic Levels

Samuel Edyme

1 year ago

3 mins read

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So far, Bitcoin has demonstrated a unique trajectory over the past weeks, distinct from broader financial movements. While global markets have been riding buoyancy, with investors embracing a more risk-on attitude following softer US inflation data, Bitcoin has charted its own path.

Bloomberg reported since the release of the US data on Tuesday, an index of global shares surged by 2% on speculation that the Federal Reserve might halt interest rate hikes and lean towards reductions in 2024. In this context, Bitcoin has seen a decline in the short term but overall gains on the longer time horizon.

This unusual behavior has resulted in a significant shift in the correlation between Bitcoin and traditional stock markets. The report read:

A 30-day correlation coefficient for Bitcoin and MSCI Inc.’s gauge of world stocks now sits at minus 0.23, the most negative since the onset of the pandemic in early 2020.

This data corresponds with the expectation that falling bond yields and rallying equities, combined with a potential Federal Reserve policy reversal, would also benefit crypto like Bitcoin, often seen as harbingers of high-risk investment appetites.

Correlation between Bitcoin and traditional stock markets. | Source: Bloomberg

Bitcoin’s Cautious Trajectory Amid ETF Anticipation

Furthermore, the dynamics of Bitcoin’s market behavior have so far proved to be notably influenced by anticipations surrounding US spot exchange-traded funds (ETFs) investing directly in BTC. Bitcoin had already surged over 100% in 2023, fueled by optimism over regulatory approvals for these spot ETFs.

In the past week, the asset has seen quite a retracement, dropping from trading above $37,000 last week to a current trading price of $36,434, at the time of writing.

Bitcoin (BTC) price chart on TradingView — Bitcoin (BTC) price is moving sideways on the 4-hour chart. Source: BTC/USDT on TradingView.com

Tony Sycamore, a market analyst at IG Australia Pty, notes that the recent selloff in Bitcoin could be attributed to ‘weak hands folding,’ given the absence of sustained upward momentum over the past week.

This sentiment reflects a cautious approach among investors, weighing the prospects of Bitcoin in the context of its recent performance and the broader expectations of developments such as the approval of a BTC spot ETF in the crypto space.

Further Sentiments On Bitcoin

Alongside Sycamore’s insights on Bitcoin’s price movements, other experts and analysts have shared their perspectives on this leading cryptocurrency. Financial commentator Tedtalksmacro pointed to a notable increase in open interest, hinting at possible significant market shifts or ‘fireworks’ ahead.

Another analyst, CryptoCon, predicts a surge in Bitcoin’s price. CryptoCon analysis suggests Bitcoin is entering its fourth mid-cycle phase, a crucial period for forecasting the crypto’s future direction. According to the analyst, this phase could lead BTC to a ‘mid-top’ cycle peak, potentially reaching around $45,500.

Conversely, JPMorgan analysts have expressed skepticism about the recent rally in the crypto market, suggesting it might be more speculative than substantive. Their report adopts a cautious tone, hinting that the market’s enthusiasm might not be fully grounded in strong fundamentals.

The analysts further highlighted the possibility of a ‘buy the rumor, sell the fact’ situation following the approval of a spot Bitcoin ETF, indicating a potential downturn after the initial hype.

Featured image from Unsplash, Chart from TradingView

Samuel Edyme

Meet Samuel Edyme, Nickname - HIM-buktu. A web3 content writer, journalist, and aspiring trader, Edyme is as versatile as they come. With a knack for words and a nose for trends, he has penned pieces for numerous industry player, including AMBCrypto, Blockchain.News, and Blockchain Reporter, among others.

Edyme’s foray into the crypto universe is nothing short of cinematic. His journey began not with a triumphant investment, but with a scam. Yes, a Ponzi scheme that used crypto as payment roped him in. Rather than retreating, he emerged wiser and more determined, channeling his experience into over three years of insightful market analysis.

Before becoming the voice of reason in the crypto space, Edyme was the quintessential crypto degen. He aped into anything that promised a quick buck, anything ape-able, learning the ropes the hard way. These hands-on experience through major market events—like the Terra Luna crash, the wave of bankruptcies in crypto firms, the notorious FTX collapse, and even CZ’s arrest—has honed his keen sense of market dynamics.

When he isn’t crafting engaging crypto content, you’ll find Edyme backtesting charts, studying both forex and synthetic indices. His dedication to mastering the art of trading is as relentless as his pursuit of the next big story. Away from his screens, he can be found in the gym, airpods in, working out and listening to his favorite artist, NF. Or maybe he’s catching some Z’s or scrolling through Elon Musk’s very own X platform—(oops, another screen activity, my bad…)

Well, being an introvert, Edyme thrives in the digital realm, preferring online interaction over offline encounters—(don’t judge, that’s just how he is built). His determination is quite unwavering to be honest, and he embodies the philosophy of continuous improvement, or “kaizen,” striving to be 1% better every day. His mantras, “God knows best” and “Everything is still on track,” reflect his resilient outlook and how he lives his life.

In a nutshell, Samuel Edyme was born efficient, driven by ambition, and perhaps a touch fierce. He’s neither artistic nor unrealistic, and certainly not chauvinistic. Think of him as Bruce Willis in a train wreck—unflappable. Edyme is like trading in your car for a jet—bold. He’s the guy who’d ask his boss for a pay cut just to prove a point—(uhhh…). He is like watching your kid take his first steps. Imagine Bill Gates struggling with rent—okay, maybe that’s a stretch, but you get the idea, yeah. Unbelievable? Yes. Inconceivable? Perhaps.

Edyme sees himself as a fairly reasonable guy, albeit a bit stubborn. Normal to you is not to him. He is not the one to take the easy road, and why would he? That’s just not the way he roll. He has these favorite lyrics from NF’s “Clouds” that resonate deeply with him: “What you think's probably unfeasible, I've done already a hundredfold.”

PS—Edyme is HIM. HIM-buktu. Him-mulation. Him-Kardashian. Himon and Pumba. He even had his DNA tested, and guess what? He’s 100% Him-alayan. Screw it, he ate the opp.

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