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Bitcoin moves in lockstep with US stocks as big traders enter Crypto market

Bitcoin moves in lockstep with US stocks as big traders enter market

Bitcoin moves in lockstep with US stocks as big traders enter Crypto marketBitcoin has shown strong volatility in traditional markets this year, highlighting the strong link between cryptocurrencies and common financial assets as more professional traders enter the digital financial arena.

The world’s largest cryptocurrency is tracking the movement of influential assets in other global markets. Contact with US technology stocks, Bitcoin moves in lockstep with US stocks as big traders enter Crypto market, crude oil and government bonds have all risen sharply over the past two years, research shows Goldman Sachs.

Bitcoin moves in lockstep with US stocks as big traders enter Crypto market

Bitcoin is often close to the closing phase of the future of the Nasdaq 100 – from which it is regarded as a sympathetic representative of the giants of America’s tech – as markets have stagnated in the first weeks of 2022. Although the price moving in bitcoin tends to be very sharp for those of most common financial assets, the connection between the two categories of assets attracts the attention of analysts and investors.

“Prior to the epidemic, Bitcoin moves in lockstep with US stocks as big traders enter Crypto market, bitcoin and other digital assets showed a low affinity for traditional financial markets – in fact, crypto behaved as a completely different ecosystem,” said Zach Pandl, head of Goldman Sachs’ foreign exchange strategy.

“But over the past two years, as bitcoin has seen widespread general acquisition, its relationship with larger assets has increased.”

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Fundstrat, the boutique research house that produces reports in both crypto and traditional markets, told customers earlier this week that “cryptoassets continue to show strong correlations with stocks”.

The Nasdaq 100 index of the major companies listed on Wall Street for tech-focused Nasdaq Composite has fallen by about 11 percent so far this year, while bitcoin closed by 18 percent. Meanwhile, the basket of unprofitable tech stocks, such as bitcoin which is considered a projected investment, fell by 23 percent.

A growing number of hedge funds are now betting on crypto currency, while Wall Street banks provide their customers with services such as digital asset loans and savings, and high-frequency trading firms are increasingly operating in space. At the same time, major digital asset technicians such as Galaxy Digital and Genesis Trading are playing a major role in the market that has once been dominated by retailers.

The influx of major financial participants into the market is one of the main reasons why bitcoin now acts like a dangerous traditional asset, analysts and traders say.

The growing behavior of Bitcoin as an asset that investors buy when investors look at the economy or sell when they are scared is also supported by a study by Nick Metzidakis, Bitcoin moves in lockstep with US stocks as big traders enter Crypto market, head of mathematical research in digital asset specialist Tyr Capital.

Bitcoin moves in lockstep with US stocks as big traders enter Crypto market

Bitcoin moves in lockstep with US stocks as big traders enter Crypto market

“Five years ago, bitcoin had. . . is closely aligned with the Nasdaq, behaving well as an ‘endangered’ asset, “said Metzidakis.” That relationship has been strong since the beginning of 2020 and proposes..

Metzidakis also found that the US activity report, which is considered one of the most important parts of the economic data released each month, also affects the price of bitcoin as it makes many other hard-earned commodities.

But analysts note that bitcoin price movements are often the result of factors related to the crypto currency itself or the digital asset market in general.

Marcello Mari, chief executive officer of Singularity Dao, a cryptocurrency trading company, said the rate of mining of new bitcoin units, so-called hashrate, and the number of dollars miners held at designated locations also contributed to the exchange rate. .

The influence of big bitcoin holders, known as “whales”, is still strong, because the ownership of digital currencies is still very much focused.

At the same time, the regulation and possible changes in financial regulations across the major economy also served as strong drivers of bitcoin prices, noted Inigo Fraser-Jenkins, head of institutional solutions at AllianceBernstein. Bitcoin, for example, collapsed last May when Chinese regulators showed a decline in the use of digital currencies.

“Currently there is very little convincing evidence that bitcoin can serve as a breakthrough in inflation or equity risk. In fact, the relationship between bitcoin and budgets goes beyond the initial stages of Covid, ”said Fraser-Jenkins. learn more

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