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.
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.
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…
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