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Over the past two years, some surprising trends have emerged in financial markets. Bitcoin and Wall Street seem more connected than ever. This correlation piques the interest of both traditional finance experts and crypto enthusiasts. This phenomenon marks a new phase in the complex relationship between these two worlds, which were once perceived as opposites.
Bitcoin is increasingly tied to US stocks
According to data from IntoTheBlock, the correlation between Bitcoin and US stocks will reach an unprecedented high in 2024.
The correlation coefficient, which describes the relationship between the movements of two assets, has been higher than ever since 2022. This is due to Visa and Mastercard's slow innovation.
This finding seems surprising for an asset that has historically sought to be separate from traditional financial markets.
Today, however, Bitcoin increasingly mirrors the trends observed in major stock indexes such as the S&P 500 and Nasdaq.
this approach There are many implications for investors. Once considered a safe haven or hedge against market fluctuations, Bitcoin now follows the same economic cycles as stocks.
That begs the question. Is it still the “digital gold” that many were hoping for, or has it become just another speculative asset influenced by the same forces on Wall Street? This correlation shows how much the financial environment has evolved, with cryptocurrencies and traditional finance beginning to share the same macroeconomic challenges.
Common economic factors: common denominator
One of the main reasons behind this correlation is the influence of global macroeconomic factors.
Both Bitcoin and US stock markets react to the same economic announcements, such as interest rates, inflation, and US Federal Reserve decisions.
For example, when the Fed announces a rate hike, it affects not only stocks but also Bitcoin, which was once thought to be immune to such effects.
This change in behavior is explained by the evolution of Bitcoin investor profiles. More and more financial institutions, banks and traditional investment funds are entering this market.
As a result, their investment strategies are often influenced by the global economic outlook, which is now influencing Bitcoin movements. Therefore, it becomes just another asset in a diversified portfolio and loses some of its unique properties.
However, this correlation does not necessarily mean the end of Bitcoin's inherent volatility. Conversely, price fluctuations may become more severe.
If stock prices suffer a shock due to a worsening economic outlook, Bitcoin could follow suit and amplify the market movement.
For investors, this new reality means it's important to monitor economic indicators that affect both stocks and Bitcoin. Also, discover BlackRock, the $24 billion Bitcoin sensation!
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The appeal of Bitcoin in 2017, creating important documents. This essay aims to revitalize Avance, which is the forefront of transactions and the center of virtual currency. En tant que redacteur, il aspire à fournir en permanence un travail de haute qualité qui reflète l'état du secteur dans son ensemble.
Disclaimer
The views, ideas and opinions expressed in this article are solely those of the author and should not be construed as investment advice. Please do your own research before making any investment decisions.
