World stock markets have mostly risen in recent weeks, especially Wall Street, and in the heat of this rally money has also returned to Bitcoin, with a revaluation of 15% in the last month.ย In this way, theย 90-day correlation coefficientย prepared by Bloomberg betweenย Bitcoinย ย and theย S&P 500ย , after weakening slightly in June, is now back aroundย 0.65, one of the highest values โโin the entire series. history, dating back to 2010ย .ย A coefficient of 1 means that the assets move in unison, while -1 would show that they move in opposite directions.
Cryptocurrencies are poised to outperform โif equities have bottomed out,โ explains Mike McGlone, an analyst at Bloomberg Intelligence.ย โThere are few more powerful forces in the markets than when the stock market falls at great speed as in the first half.ย Cryptocurrencies were part of that ebbing tide.โ
That has been the refrain throughout the year, with both stocks and cryptocurrencies moving similarly.ย The backdrop is a Federal Reserve that is engaged in a battle against the worst inflationary spiral in four decades, which has triggered volatility in all financial markets.
Whether equities and cryptocurrencies have hit their lows, however, is a question that no one can say for sure: by definition they are only noticeable after the fact, and more ups and downs are possible in the markets.
In that sense, Bitcoin’s active addresses are firmly within “a well-defined downtrend channel,” Glassnode analysts note.ย In his opinion, the activity of the network “suggests thatย there is still little influx of new demandย .”ย But at the same time, transactional demand has traded sideways or lower in recent weeks, suggesting that โonly the stable base of higher conviction traders and investors remainsโ.
โThe 2022 bear market has historically been a negative for the digital asset space,โ the analysts write in a note.ย โHowever, after such a sustained period of risk-off sentiment, the focus is on whether this is a bear market relief rally, or the start of sustained bullish momentum.โ
July was a great month for Bitcoin and other cryptocurrencies.ย Bitcoin rose 27% in the month, something not seen since October, whileEthereumย it soared 70% in its best month since January 2021ย .ย Also during the month, the total volumes of the stablecoinTetherย for Bitcoin and Ether rose, according to CryptoCompare, suggesting that investors were looking at them as safer places within the crypto universe.
However, although cryptocurrencies have recovered in recent weeks, they are still a long way from the highs reached at the end of last year.ย For example, Bitcoin has been hovering around $23,000, down from almost $69,000 in November that was its highest peak.