Bitcoin soaring as the stock markets crash
The cryptocurrency market is witnessing a surprising uptick. Bitcoin has risen from a low of R324K to a high of R360K. It has risen by more than 5% in the previous 24 hours and is now worth R362K. However, because the stock markets are plunging, Bitcoin is attempting to break the correlation.
For the first time since the merger, Ethereum is also witnessing a robust rally. Ethereum has gained more than 6% in the previous 24 hours and is on track to breach the R25K barrier. It is presently worth R24.8K.
Some of the biggest winners in the crypto market are Solana (+7%), Polygon (+5%), and Terra Classic (+56%).
Is Bitcoin breaking correlation With The Stock Market?
The crypto market's rebound is remarkable given the stock market's sell-off. The S&P 500 dropped more than 1%, while the NASDAQ-100 fell 0.5%. The cryptocurrency market is highly correlated with the overall market.
According to Coinbase Research, crypto is correlated with the traditional market with a beta of 2. It operates similarly to tech stocks and the tech-focused NASDAQ. There was no correlation between the two before 2020. Bitcoin must constantly outperform the broader market in order to function as an inflation hedge.
However, prominent crypto influencer Kevin Svenson argues that Bitcoin is still reliant on the stock market. Bitcoin's recovery is due to less speculation than the S&P 500. Svenson explains that, just as cryptocurrency did not recover as quickly as the S&P 500, it is also not dumping as quickly.
The pause in the dollar's advance is also a factor in the crypto's outstanding performance. Svenson believes that Bitcoin bulls will be hoping for a stock market rally as well. Otherwise, cryptocurrency is doomed to plummet again.
Important Events to Watch
The crypto market will be hoping for a recovery in the stock market. The speech of Fed Chair Jerome Powell can have a significant impact on any movement. He is scheduled to deliver his speech today.
