Bitcoin
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Major stock market indices fell on September 27, 2022, causing Bitcoin prices to fall.
Bitcoin wiped out gains accumulated earlier during the day due to a slight weakening of the dollar, rising to $20,338.88 at the beginning of the trading day and then falling to $18,902.66 at the end of the trading day. Ethereum also fell from a 24-hour high of $1,397.29 to $1,238.84. The value of most digital assets declined during this period of time.
The S&P 500 hit a new all-time low in 2022, down 0.5% from its last intraday high of 3,636 in June 2022. The Dow Jones Industrial Average fell 200 points after gaining 400 points earlier in the trading day.
“The fact that we’ve lost support at both 3900 and 3800 and are definitely heading towards the June lows tells us that risk aversion conditions haven’t changed much over the past six weeks,” said Art Hogan of B. Riley Financial.
The most recent moves in the stock market complete a five-day losing streak for stocks. The Dow Jones Industrial Average lost over 300 points on September 26, 2022, down 20% from its all-time high.
BTC surged before major stocks fell
Before its last drop at the end of trading on September 27, 2022, Bitcoin soared to levels not seen since mid-September 2022.
“Bitcoin is showing a notable recovery after a brief hiatus on Tuesday, which is sure to excite the cryptocurrency crowd after another tough period.
The turmoil elsewhere appears to have lifted Bitcoin, which is mostly traded as a high-risk asset,” said Craig Earlam of broker Oanda.
Cryptocurrency analyst at UTXO Management, Dylan Leclerc, commented that this sign indicates that Bitcoin has bottomed out, using the value of long-term and short-term holders as a yardstick. The basis of value is the price at which Bitcoin was bought.
He warned that a significant sell-off could still occur if Bitcoin were traded alongside other stocks, which appears to have happened when the dollar regained its strength later in the day.
“It appears that BTC is once again facing a risky selloff today. Ecosystem followers have been worried that correlations with risky assets are starting to break down, meaning that the speculative “fast money” crowd may be losing its grip on the space,” said Stefan Oullett of FRNT Financial.
Now, at the time of writing, Bitcoin has fallen to a record high of $18,448, unable to hold a position above $20,000.
The correlation between Bitcoin and the stock market is high
According to Bloomberg data, the correlation between the S&P 500 and Bitcoin reached 0.69 yesterday. A correlation coefficient of one means they are in perfect harmony, but 0.69 is among the highest values seen since 2010.
Other macroeconomic factors have also recently come into play, causing Bitcoin to behave more like a stock market.
Both equities and crypto took a beating when August 2022 inflation data was released in September 2022, with Bitcoin and Ether missing out on newly accumulated gains, dropping 6% and 8% in intraday trading following the announcement. Shares of Microsoft (MSFT), Google (GOOG) and Apple (AAPL) also fell into the red.
Author: Anton Zaitsev, analyst Freedman Сlub Crypto News
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