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Correlation Between Bitcoin Price and Stocks Reaches a New All-Time High

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Lately, Bitcoin price has been showing record-high levels of correlation with traditional markets and on July 9 the correlation between the S&P 500 and BTC reached a new all-time high. 

Data from Skew shows that the one-year realized correlation reached 0.38 on Thursday, July 9 and this came after the metric had reached new highs earlier in the week.

Bitcoin - S&P 500 Realized Correlation

Bitcoin – S&P 500 Realized Correlation. Source: Skew

The correlation with traditional markets has been growing at a steady pace recently, with the one-year reaching consecutive new all-time highs. Data from Skew also shows that the 1 month figure also reached its all-time high of 0.78 on Wednesday, but has since dropped to 61.5. 

While Bitcoin has been showing increasing correlation with the stock market, the same cannot be said for gold which has surpassed $1,800 to set a new high not seen since 2011.

A recent report by Kraken’s research department found that correlation with the precious metal has been declining. Bitcoin’s 30-day rolling correlation also hit a four-month low of -0.49, a level far below its one-year average of 0.24.

Is correlation a sign Bitcoin is maturing?

The correlation between Bitcoin and the traditional stock market grew following the coronavirus outbreak and the March 12 crash to $3,750. A recent Cointelegraph research report suggested that this trend could end after the halving but the exact opposite has happened. This is possibly due to the continued economic consequences of COVID-19.

While a strengthening correlation between Bitcoin and equities markets is said to be a sign that the asset class is maturing, the nature of unregulated Bitcoin derivative products makes it prone to long and short squeezes

Some analysts have suggested that Bitcoin’s correlation to traditional markets may signal that BTC is becoming increasingly represented across a wider range of traditionally structured portfolios and this would be a sign that adoption continues to occur.

Is Bitcoin price on the verge of a correction?

With the halving and all the hype surrounding it long past, Bitcoin price appears to have flattened. The digital asset reached a record low volatility, with the 10-day realized volatility reaching the 0.2 mark, a low not seen since November 2018. 

Monthly Bitcoin volume trading into fiat or stablecoin

Monthly Bitcoin volume trading into fiat or stablecoin. Source: CryptoCompare

Bitcoin’s decreasing volatility is also occurring alongside decreasing trading volumes and recent data shows that the volume for the BTC-USDT and BTC-USD trading pairs fell by 56% and 44% in the month of June. 

As the price continues to find resistance at the $9,300 level, the change of a sharp downside correction continues to increase. For this reason, traders are viewing $9,500 as the short-term level Bitcoin price needs to break. Failure to do so increases the risk that the price could drop to or below the $8,000 level. 

This trend can be observed across crypto derivatives and spot products. In the month of June, derivatives volumes dropped by 35.7%, the lowest figure in 2020, and spot volumes dropped by 49.3%. 

Dwindling volumes, low volatility, strong correlation with the equities, and a decreasing correlation to gold all seem to bring a bearish outlook to Bitcoin price, especially since other safe haven assets are performing well. 

Source: https://cointelegraph.com/news/correlation-between-bitcoin-price-and-stocks-reaches-a-new-all-time-high

Blockchain

Ethereum DeFi’s Ampleforth (AMPL) Drops 20% Despite “Whale” Accumulation

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  • Ampleforth (AMPL) has been one of the top-performing cryptocurrencies over the past month. The asset, whose long-term price performance is measured by its market capitalization rather than its nominal price, gained ~5,000% in July.
  • The asset has seen a steep correction over the past week as the focus of crypto investors has been on Bitcoin and Ethereum.
  • After a recovery, AMPL is dropping once again.
  • This drop comes in spite of positive on-chain and social media signs, according to blockchain analytics firm Santiment.

Ampleforth Drops 20% Despite On-Chain Data Indicating Accumulation

According to TradingView data, Ampleforth (AMPL) has dropped 20% in the past 24 hours as it has also been impacted by the flash crash in Bitcoin.

Ampleforth is an algorithmic stable coin that attempts to stabilize its price on the U.S. dollar in the long term. It responds to supply and demand by daily “rebasements,” which means that long-term holders of the token will have their balance change each day to try and center the price around a dollar. This latest price drop may be a byproduct of Bitcoin’s flash crash, coupled with an increase in the supply of AMPL.

Chart of Ampleforth's price action over the past few days from TradingView.com. Depicted is the price action of the Ethereum-based coin on FTX.
Price action may differ from exchange-to-exchange due to inefficiencies in this new(er) market and price action on futures vs. the actual coin.

This price drop in the price of AMPL comes in spite of positive on-chain and social trends, according to Santiment.

The blockchain analytics firm shared the chart below on July 31st. It shows that the weighted social media sentiment of messages regarding Ampleforth has hit a level above 3; a social media sentiment at such a positive reading suggests an extreme number of bulls as opposed to bears.

Image

Santiment added that per their data, “whales are accumulating” AMPL. Though, seeing the recent price action, it isn’t clear if they are having a big enough effect on the Ethereum-based token’s market.

How AMPL Succeeding Could Boost Ethereum

The recent price action has neither confirmed nor denied Ampleforth’s long-term goals to be a unique form of money. Thus, analysts have commented on what long-term effect this experiment could have Ethereum and the broader cryptocurrency space.

Ryan Sean Adams, the founder of Mythos Capital, says that he thinks Ampleforth succeeding will be “unbelievably bullish for” ETH.

This is because Amples becoming widely adopted as money will drive record demand for Ethereum transactions, forcing up the price of ETH. Ampleforth’s success will also trigger other innovations in money and other facets of society on the network, further driving demand for ETH.

“BCH, ZEC, XMR, BTC, ETH, DOGE, AMPL. Base monies. M0s all competing w/ each other. AMPL is the only one w/o its own chain. It settles on Ethereum. If the AmpleForth experiment is successful, we’ll see a rush of M0 monies competing on Ethereum.”

Adams notably did not comment on whether or not he thinks Ampleforth will succeed or fail as a project. He did, though, call it an “experiment.”

Featured Image from Shutterstock
Price tags: ethusd, ethbtc, amplusd
Charts from TradingView.com
Ethereum DeFi's Ampleforth (AMPL) Drops 20% Despite "Whale" Accumulation

Source: https://bitcoinist.com/ethereum-defis-ampleforth-ampl-drops-20/?utm_source=rss&utm_medium=rss&utm_campaign=ethereum-defis-ampleforth-ampl-drops-20

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Ethereum’s Compound (COMP) Slides to Multi-Month Low Despite DeFi Explosion

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  • While Bitcoin and Ethereum have seen notable bounces since imploding on Saturday evening, Compound and other altcoins are underperforming.
  • The Ethereum-based coin is down 7.5% in the past 24 hours as per data from Coin Market Cap.
  • This comes in spite of the fact that decentralized finance (DeFi), which Compound is a market leader in, has seen strong adoption.
  • Altcoins could see further losses against Bitcoin and the dollar if the market leaders continue to undergo bouts of volatility.

Compound Slides Lower In Spite of DeFi Strength

The Ethereum-based Compound (COMP) was the hottest token of June. But much has changed in the past five weeks.

In the past 24 hours, the Ethereum-based altcoin has dropped by just around 7% against the U.S. dollar. Unlike Ethereum and Bitcoin, it failed to recover a majority of the losses it incurred during Saturday night’s flash crash.

With this latest drop, COMP is near multi-month lows not seen since the launch of the asset in the middle of June. At the current price of $128, the asset is also down by approximately 70% from its all-time high price set in late June.

Chart of Compound's price action over the past few days from TradingView.com

This drop comes in spite of the fact that Compound, which the COMP coin is critical to, is the second-largest DeFi protocol and continues to gain traction. In fact, data from DeFiPulse suggests that there is around $767 million worth of cryptocurrency locked in the protocol.

Analysts expect the Ethereum-based coin to decline further as time goes on, unfortunately for its holders.

One trader explained that because the “fundamentals of [Compound’s] ‘governance’, given the public information, don’t make too much sense today,” a drop under $100 is likely:

“I’m short on $COMP, the fundamentals of the ‘governance’, given the public information, don’t make too much sense today. Won’t be surprised to see it fall below $100 unless a revenue model is proposed soon.”

His sentiment boiled down to the fact that companies that accomplish what Compound does are valued far below the market capitalization of COMP.

Altcoins Are Unlikely to Benefit if Bitcoin and Ethereum Undergo Further Volatility

Further volatility in the price of Bitcoin could further suppress altcoins, including Compound.

Nik Patel, the author of “An Altcoin Trader’s Handbook,” recently said on the outlook for altcoins in the current environment:

“Wouldn’t surprise me to see dominance now rise until BTC all-time highs (pending a confirmed Weekly breakout above $10,600) > break $20k and alts find another bottom (like Nov/Dec 2016) > they rally concurrently like March-June 2017.”

One trader, though, said that Bitcoin and Ethereum are likely to consolidate after Saturday’s flash crash. This could trigger rallies in altcoins as money flows from these large caps to smaller players.

Featured Image from Shutterstock
Price tags: ethusd, ethbtc, compusd, compbtc
Charts from TradingView.com
Ethereum's Compound (COMP) Slides to Multi-Month Low Despite DeFi Explosion

Source: https://bitcoinist.com/ethereums-compound-comp-slides-multi-month-low/?utm_source=rss&utm_medium=rss&utm_campaign=ethereums-compound-comp-slides-multi-month-low

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Why Analysts Expect Ethereum to See Further Downside Following Intense Selloff

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  • Ethereum witnessed some intense overnight volatility that caused its price to slide as low as $300
  • This intense selling pressure came about in tandem with that witnessed by Bitcoin – which caused its price to slide down to lows of $11,000
  • Analysts are now noting that ETH may be positioned to see further downside due to the strength of this movement
  • Although it has found some support and stability within the mid-$300 region, weakness against its BTC trading pair may also drag it lower

Ethereum and the entire cryptocurrency market is currently trying to stabilize following the unprecedented volatility witnessed overnight.

This came about after Bitcoin rallied to highs of $12,000 while ETH reached highs of $415.

From here, the market’s strength began degrading, with BTC ultimately reeling as low as $11,000 while Ethereum plunged to $300.

Both of these assets have since recovered slightly, but they still remain in a precarious position.

While looking towards Ethereum, one analyst is now noting that he is expecting ETH to see further near-term downside in the days and weeks ahead.

That being said, he still believes that the crypto’s macro strength makes it so that “dips are for buying.”

Ethereum Plunges as Low as $300 Overnight as Selling Pressure Ramps Up

At the time of writing, Ethereum is trading down just under 6% at its current price of $365.

This is a far cry from where it was trading at during the crux of the overnight movement when bears sent it as low as $300 on some platforms.

The drop to this level was incredibly fleeting, and it only traded here for a mere moment before being propelled back up to the mid-$300 region, where it is now consolidating.

While looking at Ethereum’s Bitcoin trading pair, one analyst explained that he is expecting it to see a continuation of this downtrend.

“ETHBTC: Channel fakeout? Gray zone is where I would like to reload up on ETH. I’m being patient – may take a few months – may not happen – that’s fine by me,” he said.

Ethereum

Image Courtesy of TraderXO. Chart via TradingView.

As seen on the chart he offers, the ETH/BTC price he is looking to accumulate at exists around 0.026. It is currently trading at 0.033.

Analyst: BTC Likely to See Further Downside, But Macro Uptrend Remains Strong 

Another analyst explained in a recent tweet that he now believes that Ethereum could pull back a bit further against USD before finding meaningful support.

“ETH / USD: Price perfectly tapped our previous highs of $315 overnight and was pretty much instantly bought back, over a 12% wick, bulls seem to be buying back up dips… LTF seems like we could pullback a little more, with some continuation to the downside, dips for buying.”

Image Courtesy of Cactus. Chart via TradingView.

As seen in the above chart, the lower-$300 region has been a historically important level for Ethereum, and the overnight dip here further confirms this.

Featured image from Unsplash.
Charts from TradingView.

Source: https://bitcoinist.com/why-analysts-expect-ethereum-to-see-further-downside-following-intense-selloff/?utm_source=rss&utm_medium=rss&utm_campaign=why-analysts-expect-ethereum-to-see-further-downside-following-intense-selloff

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