Bitcoin saw some slight turbulence over the past few days, with its price rallying as high as $9,300 before facing a rejection that caused it to slide beneath $9,000 for a brief period.
This volatility appeared to be directly linked to news regarding US payroll numbers, signaling that the cryptocurrency presently remains highly correlated to the traditional markets.
Much to the chagrin of buyers, this throws some cold water on the “safe haven narrative” that many investors have been pointing to as a potential catalyst for further upside.
Nevertheless, there is still a strong case to be made that the cryptocurrency’s close ties to the traditional markets will help boost the benchmark digital asset’s near-term outlook.
Bitcoin Remains Firm “Risk On” Asset – Reacts to News Regarding US Payroll Data
Bitcoin’s correlation with the stock market first became clear in late-February, when the asset’s price began declining in tandem with the benchmark stock indices.
This correlation grew in March and persisted throughout May, but did show some subtle signs of breaking in June.
Although many investors still believe that the cryptocurrency is a “safe haven asset” that will ultimately benefit from turbulence within the traditional markets, its recent price action seems to suggest otherwise.
Earlier this week, Bitcoin’s price rallied to highs of $9,300 before facing a rejection that led it lower.
This movement came about in close tandem with that seen by the benchmark stock indices, which all pumped on positive news regarding payroll data in the US.
The latest set of Non-Farm Employment data showed that the US labor market created a total of 4.8 million jobs – this signals that the economy is recovering quickly.
BTC reacted to this news in tandem with the traditional markets, an occurrence that one economist claims is proof of it being a firm “risk-on” asset.
“Move was small, yet today was the first time ever BTC traded payrolls like a traditional asset. Among economic data releases, US payrolls is one of the two largest sources of price volatility. The market is treating bitcoin as a risk-on asset, not as digital gold.”
BTC’s “Risk On” Status Could Boost It in the Near-Term
As NewsBTC reported yesterday, analysts do believe that a shift in narratives regarding the current pandemic could boost the traditional markets – in turn providing momentum to Bitcoin.
One analyst cited in the report said:
“Stocks, BTC, & ETH all printed their highs around June 8th. •News cycle then: ‘[virus] cases spike as economy re-opens.’ •News cycle now: ‘As cases spike, hospitalizations & deaths continue decline.’ Add some positive economic news & we could see those highs again soon.”
Because both the economy and the stock market are showing signs of strength, Bitcoin’s confirmed status as a “risk-on” asset may provide it with some much-needed momentum in the coming days and weeks.
Featured image from Shutterstock.