Lately, Bitcoin’s price has shown record correlation with traditional markets, and on July 9, the correlation between the SP 500 and the BTC hit a new all-time high.
Skew data shows that the one-year correlation reached 0.38 on Thursday, July 9, after the metric hit new highs earlier this week.
Bitcoin – SP 500 correlation performed. Source: Skew
Correlation with traditional markets has grown steadily lately, and new historical peaks have been reached in a year. Skew data also shows that the 1-month number also reached its all-time high of 0.78 on Wednesday, but has since dropped to 61.5.
While the price of Bitcoin is becoming increasingly correlated with the stock market, this cannot be said for gold that has exceeded $ 1,800 to hit a new high that has not been seen since 2011.
A recent report from the octopus research department found that the correlation with the precious metal has decreased. Bitcoin’s continuous 30-day correlation also hit a four-month low of -0.49, well below the annual average of 0.24.
Is the correlation a sign that Bitcoin is maturing?
The correlation between Bitcoin and the traditional stock market grew to $ 3,750 after the corona virus outbreak and collapse on March 12. A recent Cointelegraph research report suggested that this trend could end after halving, but the opposite was happening. This may be due to the continued economic impact of COVID-19.
While an increasing correlation between Bitcoin and the stock markets is meant to be a sign that this asset class is maturing, it is prone to bullish and bearish contractions due to the nature of unregulated Bitcoin derivatives.
Some analysts have suggested that Bitcoin’s correlation with traditional markets may indicate that BTC is increasingly represented in a wider range of traditionally structured portfolios, and this would be a sign that acceptance is continuing.
Bitcoin price about to be corrected?
With the halving and all the hype that surrounds it, Bitcoin’s price seems to have flattened out. The digital asset reached record volatility, with 10-day volatility hitting 0.2, a minimum that has not been reached since November 2018.
The monthly volume of Bitcoin traded in fiat currencies or stablecoins. Source: CryptoCompare
The decline in bitcoin volatility also occurs in conjunction with falling trading volumes. Current data show that the volume of the trading pairs BTC-USDT and BTC-USD fell 56% and 44% respectively in June compared to the previous month.
As the price continues to face resistance at $ 9,300, the change from a strong downward correction continues to increase. For this reason, traders are watching $ 9,500 as Bitcoin’s short-term price has to rise higher. Doing so increases the risk that the price will drop below the $ 8,000 level.
This trend can be observed for all cryptocurrency derivatives and spot products. In June Derivatives volume fell 35.7%, the lowest in 2020, and spot volume decreased 49.3%.
Reduced volumes, low volatility, strong correlation to stocks and a declining correlation to gold seem to bearish outlook on Bitcoin price, especially since other safe haven assets are performing well.