After months of plummeting, it jumped more than 17% in July, its best performance since October. Ether rose 57%, its biggest monthly gain since January 2021.
The rally in line with gains in assets plus risks such as equities, with investors betting economic weakness could deter the Fed from aggressively tightening monetary policy.
Bitcoin’s 40-day correlation with the tech-driven Nasdaq now stands at 0.90 – up from 0.41 in January – where 1 means their prices are moving in perfect sync.
The major cryptocurrency has exhibited a consistent positive correlation with the Nasdaq since late November, unlike previous years when it was consistently negative, which meant they were flying in opposite directions.
Itai Avneri, deputy managing director of cryptocurrency trading platform INX, called July’s convergence “good news.”
“That means institutional investors view bitcoin like any other asset,” he said. “When the march turns around – and it will – these institutions will come back and invest in crypto.”
The gains weren’t limited to bitcoin, as the value of the global cryptocurrency market rebounded above $1.15 trillion last month, adding more than $255 billion since the end of June, according to data. data from CoinGecko.
Assets under management in digital asset investment products rose 16.9% to $25.9 billion in July, reversing the 36.8% decline seen in June, according to research firm CryptoCompare.
However, the changes have been thinned out – indicating that many investors believe it is too early to turn bullish in a highly uncertain macro environment, with rampant inflation, America and Europe on the brink of recession, not to mention of the implosion of some major cryptocurrency players.
Average daily volumes across all digital asset investment products fell 44.6% to $122 million, the lowest since September 2020, CryptoCompare found.
“Over a medium-term horizon, we are bearish (on crypto) despite the current rally, this aligns with our stance on equities,” MacroHive researchers criticized Friday, citing inflation, recession risks and rate hikes.
Correlation of bitcoin with the Nasdaq:
AWAY FROM $60,000.
Bitcoin is currently trading at $23,336, consolidating around the $24,000 mark after hitting that level last week.
It would likely trade in a tight range around $20,000, plus or minus 10-15%, until the trajectory of the economy becomes clearer, according to Chris Terry, vice president of the platform. SmartFi loans.
“We have to stay in this blocked march for weeks and weeks.”
On the other hand, if the United States enters a prolonged recession and the Fed is forced to cut interest rates, bitcoin could benefit, said Russell Starr, CEO of Valour, which creates exchange-traded products for digital assets.
“It will take another quarter of recession before we see a recovery towards the $60,000 levels,” he said.
For investors who plunged into crypto during its push at the height of the outbreak’s easy-riding politics, the next few months could be quite bumpy, according to Adrian Kenny, senior commercial trader at GlobalBlock.
“There is still an arguably considerable mountain to climb in terms of ‘normality’ or hope for a return to the heights of 2021 de sitt.”
The Cryptocurrency Crash: