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For most of the year, Bitcoin, the world’s largest and most dominant cryptocurrency, has close ties with the traditional financial world.
In fact, given the increasing uncertainty and there are some speculations about the robustness of Bitcoin as a store of value and safe-haven asset, during 2020, S&P 500, gold and Bitcoin have been the focus of market attention.
What’s interesting about BITCOIN is that the latest market data provided by Santiment highlights the correlation between Bitcoin and the S&P 500 Index. This is a fairly new trend, as its correlation with Bitcoin has dropped to zero, given the rest of the year The performance of the market is a completely different move.
In fact, this is the first time this has happened since May, but what does this mean for the cryptocurrency market?
Compared with the traditional financial world, the price of Bitcoin has a lower correlation, so its price always benefits. As of press time, Bitcoin continues to trade at a price level slightly below $13,000 after it has surged by more than 14% in the previous week.
BITCOIN Although it is surprising that the correlation between the S&P 500 Index and Bitcoin has dropped from 57% to close to 0, the reasons behind it still seem to have caused a lot of controversy.
Santiment pointed out, “After reaching the highest correlation in history in August, today’s trends bode well for cryptocurrencies. Historically, Bitcoin’s dependence on the world market and other asset classes and industries is extremely low. And transactions can be carried out independently without interference from non-cryptocurrency events, so that they can flourish.”
The rise in the price of Bitcoin undoubtedly plays a vital role in the 30-day average price line. However, after a week when the cryptocurrency market has shown quite a positive effect, this may also be a short-term decline. After all, we have also witnessed the announcement of PayPal, one of the world’s largest payment service providers, that they are expanding support for cryptocurrencies.
BITCOIN With the increasing independence of Bitcoin relative to other non-encrypted assets, is a bull market possible?
Interestingly, despite the fundamental changes in its correlation with Standard & Poor’s, its correlation with gold, one of the key assets of traditional finance, is still very strong. The market data provided by Skew pointed out that after showing a negative correlation at the beginning of this month, the 1-month correlation of BTC-XAU has now returned to more than 23%. This means that Bitcoin is still connected to the traditional market to a certain extent.
Although independent Bitcoin is the best embodiment of its price trend and can be expanded through the non-mainstream cryptocurrency market, according to Skew’s data, the volatility of BTC is still declining. This finding may indicate the period of Bitcoin integration. The inevitability.
In the past few weeks, Bitcoin’s actual weekly volatility has dropped from 58% to nearly 38%, which may indicate that its trading price has stagnated.
As of now, Bitcoin is still trying to break through the resistance level of $13,000. Although as the end of the year approaches, many people in the community are eagerly waiting for the 2017-style mad cow to appear, but this is still a little out of reach. However, given the larger plan and the overall economic environment, Bitcoin’s current price point is still quite positive.