Bitcoin Snaps Correlation With S&P 500: What Does That Indicate?
2024.07.22 05:54
By Matti Williamson
- Bitcoin’s correlation to the S&P 500 may have ended
- What triggered the S&P 500 weakness and why Bitcoin is rallying
broke its way higher while the US markets, including the , are down.
Bitcoin was strongly correlated to the top US indices. Some assumed that the ETFs may further tighten the ongoing correlation.
However, the correlation broke as Bitcoin snapped higher while the S&P 500 was hammered.
On Wednesday, Bloomberg reported the current US administration is considering a foreign direct product rule (FDPR) to control chip equipment exports to China.
Donald Trump’s remarks that Taiwan should pay the United States for protection also sent ripples through the financial markets.
CrowdStrike (NASDAQ:), a leading cybersecurity firm, issued an update that triggered a global outage for its clients. Banks, airlines, and even hospitals were affected.
Bitcoin, on the other hand, enjoyed strong inflows from the ETFs as evidenced by the Bitcoin supply backing the ETFs:
Trump’s remarks (again) on possibly using Bitcoin as the U.S. strategic reserves have also contributed to BTC rally. The U.S. government holds approximately 213,000 BTC.
The above circumstances created the right conditions for Bitcoin to break its chains from the traditional financial markets.
If Bitcoin continues to rally while US markets fall, investors may consider it a new safe-haven asset. Being a new safe haven asset could mean moderate gains ahead for Bitcoin.
Will Ethereum Enjoy the Same Status as Bitcoin?
Once the approved spot ETH ETFs are listed for trading, the inflows will be closely monitored and compared to BTC inflows. While high inflows may impact ETH’s price, it is still uncertain whether it can earn the same status as Bitcoin.
Nevertheless, for the time being, meme coins enjoy the strongest gains. As Bitcoin rallied, so did and ETH.
rallied around 20%, while Turbo gained around 25%. Aptos and (L1s) also rallied despite being unrelated to BTC. It demonstrates that a rally in Bitcoin may be sufficient to ‘push’ the crypto markets higher.
All eyes will be on next week and whether the ‘de-pegging’ of BTC from the S&P 500 is sustainable.
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