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The cryptocurrency market is highly dependent on the situation on Wall Street.
According to Gary Black, managing partner of The Future Fund, the correlation between the price of bitcoin and the Nasdaq 100 index has reached a record high since 2010 – 66%. As the expert notes:
“Bitcoin is an asset that is invested for the long term, and its price goes down when interest rates rise and rises when interest rates fall. It is different from gold, the US dollar and other savings-oriented financial instruments.”
The correlation between #BTC and the Nasdaq 100 (NDX) has reached 0.66, the highest ever dating back to 2010. #btc is an ultra long duration asset that falls as int rates rise, and rises as int rates fall. It is not like gold, the US $, or other stores of value. @saylor @elonmusk pic.twitter.com/XmGj3BSHL6
— Gary Black (@garyblack00) January 24, 2022
Goldman Sachs predicts that the US Federal Reserve will raise its key interest rate four times this year. As Gary Black explains, in the event of an increase in interest rates, investors first of all sell off assets that have shown significant growth. If you look at the stock market, since the beginning of this year, investors have been actively selling shares of a number of large technology companies, which showed significant growth in 2021. That is, investors reacted already to the very information atmosphere of the increase in the interest rate of the US Federal Reserve.
So, from the shares of Microsoft, Apple, Amazon Alphabet (Google), Nvidia, Tesla, Meta (Facebook) and Netflix since the beginning of the year, 1.8 trillion dollars of investments have been withdrawn, which is even more than from the cryptocurrency market during the same time (900 billion dollars, as of the first half of January 25).
January 24 – In the first half of January 25, Bitcoin moves in unison with the Nasdaq 100, and, as before, showing greater dynamics in percentage terms than the index itself. It is worth noting that since the Nasdaq 100, Nasdaq Comp, and S&P 500 often move in the same direction, the price of bitcoin has previously been correlated with the S&P 500.
So, literally until late in the evening Moscow time on January 24, Wall Street was in the red (according to Nasdaq – minus 4.5%). However, once the index went up in the last two hours of New York stock trading, bitcoin also began to strengthen. As a result, in the first half of January 25, #1 cryptocurrency is trading at about $36.3 thousand, adding 5% in daily movement.
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