Is Bitcoin’s price of $75K the lowest it can go? — Data suggests BTC to stocks decoupling will continue

BitcoinBTC) fell below $75,000 on April 6, pressured by traditional markets as S&P 500 futures hit their lowest levels since January 2024. WTI Oil Futures also fell below $60, for the first four-year period. Markets recovered some of their losses later, which allowed Bitcoin to return to the $78,000 mark.

Bitcoin’s correlation with the traditional market is often short-lived.

Some analysts believe that Bitcoin’s price has fallen 30% since its peak. However, the historical evidence shows many examples of Bitcoin’s even greater recovery. Bitcoin’s correlation with the traditional markets has a tendency to last only a short time. According to several indicators, traders may be waiting for more favorable entry conditions.

Bitcoin’s recent performance has been closely tied to the S&P 500, but this correlation fluctuates significantly over time. In June 2024, for example, this correlation became negative as both asset classes took opposite moves over a period of nearly 50 consecutive days. Furthermore, while the correlation metric exceeded the 60% threshold for 272 days over two years—roughly 38% of the period—this figure is statistically inconclusive.

Bitcoin’s recent drop in price to $74,440 can be attributed to the uncertainty that has been prevailing on the traditional market. Although periods of high correlations between Bitcoin and other assets were seen in the past they did not last very long. Most major tech shares are trading at a discount of 30% to their previous highs.

The gold standard has failed to deliver. “store of value” Between 2022 and 2020

Bitcoin, with its market cap of $1.5 trillion, is one the most traded currencies in the world. Gold is often considered the “only reliable” asset.store of valueThis perspective ignores its volatility. In September 2022, the price of gold fell to $1 615 and it took three years for its all-time highest level to be recovered.

Although gold boasts a $21 trillion market capitalization—14 times higher than Bitcoin’s—the gap in spot exchange-traded fund (ETF) assets under management is much narrower: $330 billion for gold compared to $92 billion for Bitcoin. Bitcoin-listed products like Grayscale Bitcoin Trust, which debuted in exchanges in 2016, gave gold a 12-year market advantage.

Bitcoin ETFs are important and resilient in BTC derivatives

Bitcoin perpetual swaps, or inverse swaps, are in excellent shape. funding rate hovering near zero. The balance of leverage is balanced between the longs and shorts. This is a sharp contrast to the period between March 24 and March 26, when the funding rate turned negative, reaching 0.9% per month—reflecting stronger demand for bearish positions.

In addition, $412 million liquidation of leveraged The size of the long position between April 6 and 7 was modest. Comparatively, the liquidation of leveraged bullish position totaled 948 million dollars when Bitcoin dropped 12.6% from Feb. 25 to Feb. 26. It is possible that the traders had better preparation or used less leverage.

The stablecoin market in China is another indicator of the current sentiment. Stablecoins typically trade with a premium up to 2% above the official US Dollar rate. In contrast, a discount below 0.5% can signal traders’ fear of crypto markets.

Related: Michael Saylor’s Strategy halts Bitcoin buys despite dip below $87K

Even though Bitcoin dropped to below $75,000, the premium on USD Tether (USDT), remained at 1 percent. It is likely that investors will shift their investments to stablecoins and wait for the confirmation that US stocks have reached their bottom price before they return to cryptocurrency.

Historically, Bitcoin has shown a lack of correlation with the S&P 500. The near-zero BTC Futures Funding Rate, modest liquidations of futures totaling millions and the stablecoin price premium in China all point towards the possibility that Bitcoin may have reached a low at $75,000

The article does not provide legal advice or investment recommendations and it is intended for informational purposes only. This article is solely for informational purposes. It does not represent or reflect Cointelegraph’s views.