Bitcoin trade like Big Tech as Markets Reel
Bitcoin trade like Big Tech as Markets Reel
- stocks and cryptos plunged to Jackson Hole from on Friday
- Bitcoin in particular is acted like a large technology share, say analysts, and until the macro conditions change, this will remain
The markets extended their declines on Friday after the chairman of the US Federal Reserve, Jerome Powell, took a more restrictive attitude during his statements in Jackson Hole. Cryptocurrencies continued to slip into the red, since the dealers were increasingly discouraged by the likely step of the Fed in September.
The S&P 500 and Nasdaq were traded by 2.3 % and 2.8 % lower at the time of publication. Bitcoin and ether also lost 4 % or 7 %.
"Today's response to the speech of the Fed Chairman Powell in Jackson Hole is a bit surprising, because at least for Fed observers he did not really say something new and the markets seem to have largely priced in an interest increase by 75 basis points," said Bill Cannon. Head of portfolio management at the fund manager for digital assets Valkyrie Investments, said Blockworks.
"Powell made it clear through his recent statements that interest rate increases are necessary to cool the inflation, and today's explanation confirmed this strategy," said Cannon.
cryptos had trouble turning around this year. Bitcoin and Ether have fallen by more than 50 % since the beginning of the year, and without a significant change in macroeconomic conditions, analysts do not expect any rally.
"Unfortunately, Bitcoin behaves like a technology share in inflation," said Patrick Feeney, former hedge fund dealer and founder of Feeney Factor.
"[Bitcoin IS] should be digital gold, but it just doesn't work that way lately," said Feeney.
Bitcoin correlation and market expectations
The correlation coefficient of Bitcoin with the S&P 500 reached 0.64 in early May, before it fell about 0.4 to about 0.4 fell from Coin metriken. A coefficient of 1 means that the assets move perfectly synchronously.
The trend goes up again, as the data pointed, with the correlation coefficient fluctuating near 0.5 at the beginning of this week.
"Last year, crypto and stock markets acted closely together," Clara Medalie, strategic initiatives and research director at the data provider Kaiko told Blockworks at the beginning of this month. "What we saw in the past year is that the correlations tend to increase about important publications of economic data, such as session notes of the fed or inflation figures."
Last data such as falling unemployment and the latest report by the consumer price index (CPI) could indicate that inflation cools down. The preferred level of inflation of the FED, the price index for personal consumption editions, which was published on Friday before Powell's statements, also shows subsequent prices in July. The change in the annual comparison was 6.3 % in July, after 6.8 % in June.
Nevertheless, Powell warned on Friday that it was still a long way for sustainable price stability.
"Estimates of long-term neutrality are not a place where you can stop or stop," said Powell during his speech on the second day of the Symposium , organized by the Kansas City Federal Reserve. "Our decision at this meeting in September will depend on the entirety of the incoming data and the developing prospects," he said.
The futures markets now require a probability of 60.5 % for an interest rate increase of 75 basis points in September, which, according to the central bank, would be the third increase as a result of this size Data from the CME group.
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The article Bitcoin Trading Like Big Tech As Markets Reel is not a financial advice.