Cryptocurrency
Bitcoin’s Rising Correlation With Stocks Debunks Haven Narrative
Bitcoin’s Rising Correlation With Stocks Debunks Haven Narrative: Bloomberg reports, “Stocks were jolted Friday following news President Donald Trump tested positive for coronavirus. But in a move counter to the often-touted narrative that the dominant cryptocurrency acts as a haven, Bitcoin also retreated. “That’s because the correlation between Bitcoin and the benchmark S&P 500 stock index remains […]
Bitcoin’s Rising Correlation With Stocks Debunks Haven Narrative:
Bloomberg reports, “Stocks were jolted Friday following news President Donald Trump tested positive for coronavirus. But in a move counter to the often-touted narrative that the dominant cryptocurrency acts as a haven, Bitcoin also retreated.
“That’s because the correlation between Bitcoin and the benchmark S&P 500 stock index remains positive, meaning that its price movements are consistent with those in equity markets. In addition, Bitcoin’s 14-day Relative Strength Index (RSI) reading clocks in at 45, while the equity index’s is at 51. That suggests the cryptocurrency’s decline has been more severe than the overall stock market drop.
“The S&P 500 has lost 6% since its September high, while Bitcoin’s down about 15% since its mid-August peak.
“’We need more clarity on the election cycle and additional stimulus to help get things moving again in equities — and also in Bitcoin,’ said Meltem Demirors, chief strategy officer of CoinShares. ‘Bitcoin has stayed range-bound despite a slew of positive news, largely because there is not enough inflation due to weak aggregate demand. We need Bitcoin’s behavior to match its narrative before we see a breakout.’
“U.S. stocks fell on Friday as investors weighed the implications of Trump’s positive test for the coronavirus. Traders had already been bracing for turmoil ahead of the November elections. The CBOE Volatility Index, known as Wall Street’s fear gauge, jumped the most in a month.