Bitcoin and other major cryptocurrencies were consolidating the last few day, after it’s recent runup, even though stocks were pushing higher, cryptocurrencies got ahead of stocks and took a pause for equities to catch up.
On Thursday, Bitcoin fell over 3 percent, was trading in the range of about $23,065, despite the Nasdaq 100 Index rising 2 percent. Tt has been a promising start to the year for Bitcoin, which in 2022 fell 64% in its second-worst annual performance on record for last year. Daily gains have not been as high as financial markets, and have certainly been more modest than tech stocks in which they were trading in sync with last year, but the overall trend has been solidly upward. Analysts attribute this to the changing economic backdrop since the lows, which is helping risk assets, including Bitcoin. Year-to-date, Bitcoin has gained almost 40 percent, having jumped from the $16,000 per coin to the $23,000 mark. However, alongside higher prices comes an increased motivation for holders and miners to take money off the table, which could create some downward pressure in the short term if this occurs
Bitcoin and Stock Correlation
Bitcoin has shown a high level of correlation to stocks in recent years and months. The correlation between Bitcoin and stocks is considered to be positive, meaning that when stocks rise, Bitcoin tends to rise as well, and when stocks fall, Bitcoin tends to fall as well. This correlation has been particularly strong during times of market volatility and economic uncertainty, such as during the COVID-19 pandemic.
Some analysts believe that the correlation between Bitcoin and stocks is driven by the fact that both are considered to be risky assets, and investors may be more likely to buy or sell both at the same time as they seek to manage their overall portfolio risk. Additionally, the increasing mainstream acceptance and institutionalization of Bitcoin may also be contributing to its correlation with stocks.
Bitcoin recently hit a bottom in the $16,000 range, after experiencing a significant price drop from its all-time high of around $65,000, reached in November of 2021.
Despite this recent decline, many experts believe that Bitcoin’s price will soon rebound and rise to the range of $30,000 or more as the stock market swings higher.
