- The 90-day rolling correlation between Bitcoin’s spot price, the Nasdaq index, and the broader S&P 500 index reached its lowest level in two years.
- According to data from Glassnode, the number of Bitcoin addresses holding more than one coin has reached an all-time high.
While investors find joy in the rising prices of Bitcoin, certain surprising aspects of the market have caught their attention. Bitcoin’s recent decoupling from traditional finance is particularly noteworthy, emphasizing its independence as an asset.
Analysts suggest that while some investors celebrate Bitcoin’s resilience in the face of macroeconomic disturbances, others express dissatisfaction over its limited participation in the periodic upswings typically associated with events that drive prices higher. Nevertheless, as Bitcoin investors appreciate its emergence as a non-correlated asset, they remain vigilant, observing how the asset reacts less to global macro catalysts than its traditional financial counterparts.
Correlation of Bitcoin with Nasdaq and S&P 500
Based on available data, Bitcoin’s correlation coefficient with major indices such as the S&P 500, Dow Jones Industrial Average (DJIA), and Nasdaq Composite has experienced a significant decline since the beginning of the year. The correlation has decreased by over 50.5% with the S&P 500, 30% with the DJIA, and 49.4% with the Nasdaq Composite.
On July 5th, the 90-day rolling correlation between Bitcoin’s spot price, the technology-focused Nasdaq index, and the broader S&P 500 index reached its lowest level in two years. The correlation coefficient, which ranges from -1 to 1, indicates the relationship between certain events and the corresponding assets. A coefficient of -1 signifies an inverse pricing relationship, while a coefficient of 1 indicates a direct pricing relationship.
Bitcoin’s correlation with gold stands at 0.33, while its correlation with the U.S. dollar is -0.23. The proximity to zero for both correlations implies a negligible pricing relationship, which is ironic considering the initial perception of Bitcoin as an inflation hedge.
Moreover, amidst these dynamics, various events, including regulatory challenges, clarification regarding classification, and the news of the SEC approving spot exchange-traded funds (ETFs), have played a role in shaping the crypto market.
Furthermore, Bitcoin investors have shown keen interest in the asset, emphasizing a positive response to its decoupling. Interestingly, Bitcoin has shown a consistently positive pricing relationship with Ethereum. Despite their utility and consensus mechanisms differences, these two assets have exhibited a relative correlation in trading and have demonstrated similar results across various metrics.
This independence between Bitcoin and Ethereum suggests the maturation of both assets, with significant price movements directly linked to developments specific to each asset.
Increasing Number of Bitcoin Addresses Holding More Than 1 Coin
According to data from Glassnode, an on-chain analytics firm, the number of Bitcoin addresses holding more than one coin has reached an all-time high. The data indicates that 1,009,396 addresses hold more than one coin.
Source: Glassnode
Significantly, this trend of interest and positive outcomes for the asset has not occurred suddenly but has gradually developed across various metrics. At the same time, cryptocurrency exchanges have experienced significant outflows in recent months, leading to record-low exchange balances. This can be attributed to the growing trend of holding and accumulation among investors.
Moreover, with the continuous upward trajectory in prices, these assets are increasingly viewed as a favorable avenue for individuals seeking alternative investment options. At the time of writing, Bitcoin is being traded at $31,300.40, representing a 3.75% increase over the past five days and a notable surge of 24% over the last month.
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