The correlation between the surging US equity markets and Bitcoin (BTC), the world’s largest cryptocurrency, has been deteriorating in recent months. This is due to a combination excess supply, and weak demand, which has caused a price decline of over 20% from the June highs of $70,000.
Bitcoin and Nasdaq Correlation
According Bloomberg reports that the 90-day coefficient of correlation between Bitcoin and Nasdaq 100 dropped on Tuesday to 0.21, its lowest value since May 1. This drop reflects more than a 50% decrease in correlation during the past two month.
Experts attribute the decoupling of these markets to multiple factors. “idiosyncratic” Bitcoin supply events. Joshua Lim is the founder of Arbelos Markets and he explains the current state of Bitcoin. spot sales from seized BTC In the last few months, the German and US governments have been holding meetings to distribute funds received from the now defunct Bitcoin Exchange Mt. Gox.
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You can also read about the advantages of using reported NewsBTC has reported that Bitcoin’s recent decline from its high in March of $73,700, was made worse by the Mt. Gox’s administrators are returning approximately $9 billion of tokens back to creditor.
The German authorities also sold over half the BTCs seized in January from a pirate site, adding further to the pressure on the market seen the previous month.
Manuel Villegas is a research analyst with Julius Baer. He highlights the supply overhang that will impact the market. market confidence. Villegas has stated that:
In the coming days, it is likely that excess tokens will reach central exchanges and put pressure on prices. A looming overhang of tokens has been the primary factor in affecting investor confidence.
Mining Capitulation and Falling Profits
Bitcoin Miners are also under pressure because of these issues. sell tokens due to declining profitability.
The financial impact of April’s Bitcoin crash is still being felt by these miners who are responsible for the Bitcoin blockchain. Halving eventThe number of tokens that they received for mining has been reduced.
As a result, some miners sell their BTC stock to cover their operational costs. Data CryptoQuant, a crypto-analytics firm, shows that miners are reverting to December 2022’s hashrate levels. This is similar with the conditions post FTX collapse.
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Bloomberg estimates that the all-in production cost for miner is around $54,500. If prices are significantly lower than this threshold, then miners will need to. liquidate To cover the operational costs, some token holdings will be required.
Finality, the Mt. Gox distribution and miner’s selling pressure increased the level of uncertainty among investors. This further affected BTC’s value recovery.
BTC is currently trading at $57.850, up over 2% from the previous 24 hours.
Featured Image from DALL E, Chart by TradingView.com
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Source: www.newsbtc.com
