Bitcoin [BTC] has recently surpassed a key resistance level, extending its upward trajectory on the charts. Notably, the digital currency’s correlation with U.S equities has reached a two-year high as well. This indicates that Bitcoin is increasingly moving in sync with traditional financial markets.
Bitcoin’s Correlation with U.S Equities Surges to a Two-Year Peak
According to recent data from IntoTheBlock, Bitcoin’s correlation with U.S equities has hit a two-year peak. In the last three months, Bitcoin has experienced moderate volatility with periods of slight fluctuations, maintaining a range close to its initial value.
Overall, BTC’s price movements have been relatively steady, showing a subtle positive trend towards the end of September.
In contrast, the S&P 500 has demonstrated consistent performances with less pronounced volatility, in comparison to Bitcoin. Despite this, both assets have moved in tandem, reflecting similar market sentiments.
While BTC’s intrinsic volatility leads to slightly more notable movements, the parallel trends indicate that it is currently behaving as a risk asset, closely tracking macroeconomic trends and investor sentiment.
Implications for Bitcoin Investors
The price trend of Bitcoin suggests a “risk-on” environment, where investors maintain or slightly increase their exposure to both traditional equities and cryptocurrencies. BTC stands to benefit from positive sentiment if the S&P 500 continues its stable performance or strengthens. However, any adverse developments in the equity market could also impact BTC due to their correlated movements during this period.
As the correlation persists, the price movements of Bitcoin may increasingly resemble those of traditional equities. In periods of bullish stock markets, this could bode well for BTC, as a risk-on sentiment attracts more capital inflows into Bitcoin and other digital assets.
Bitcoin Sustains Its Upward Momentum
An assessment of Bitcoin’s daily chart indicates that it closed with gains of just under 1% in the previous trading session.
Although the price briefly touched the $66,000 mark before settling around $65,789, BTC is currently trading at approximately $65,660, following a minor decline of less than 1% on the charts.
Moreover, an analysis of its Average True Range (ATR) revealed a value of around 2,099.44. This suggests that on average, Bitcoin’s price range (from high to low) over the last 14 periods is roughly $2,099. The ATR has been decreasing since mid-August, indicating a decline in volatility over time.
This could imply that the market has been witnessing less dramatic price swings compared to previous months.
When the ATR is low, it may indicate that the asset is primed for a breakout in either direction.