Cryptocurrency prices have been trading in a similar range as the correlation between them and U.S. equities and macro events weakens, according to Bernstein analysts. Bitcoin (BTC) was trading at $23,800, by 10 a.m. EST, according to TradingView data, while Ethereum (ETH) was lower by 2.3% at $1,600.
The crypto market appears to be stuck between bulls and bears, the note read, “awaiting any further catalysts.” The market’s sensitivity to traditional markets has been declining, with every dip being bought after down days in U.S. equity markets, the analysts said.
Bitcoin’s correlation with equities has fallen steadily throughout the year. The correlation between the leading cryptocurrency by market cap and the Nasdaq Composite has fallen to 0.58 now from 0.94 at the beginning of February, according to The Block data.
Regulatory headwinds, a lack of institutional adoption, and a lack of significant use cases present a bear case for markets, the Bernstein analysts said. Its correlation to tech equities means bitcoin’s value as an inflation hedge has failed, the note added.
Weakening correlation to the U.S. poses a bull case for crypto, according to Bernstein. “A large part of stablecoin issuance (>50%) and global crypto trading (95%) remains outside the U.S market. Thus, the crypto market is driven by more global flows vs U.S. flows.”
Crypto-related stocks opened higher on Monday, with Silvergate leading the gains. Coinbase was trading at $60.57, up 3.5% by 10:10 a.m. EST, according to Nasdaq data, while Silvergate jumped 5.8% to $15.15, and MicroStrategy gained 4.7% to trade just below $265. Jack Dorsey’s Block failed to benefit from the buoyant mood in markets and slipped 0.4%.
Meanwhile, Grayscale’s bitcoin trust slipped below $12 last week, continuing a disappointing month for the fund. GTC’s discount to net asset value showed signs of arresting its decline throughout the week. Shares in the fund were trading at a discount of 45.8% to the value of the bitcoin in the fund, according to The Block data.
The weakening correlation between crypto and traditional markets is a sign that the industry is maturing, with more global flows driving the market than U.S. flows. While regulatory headwinds and a lack of institutional adoption remain bearish factors, the declining correlation to U.S. equities and macro events is a positive sign for the future of the industry.
Cryptocurrency and blockchain technology have the potential to revolutionize the global financial system. While the industry is still in its early stages, the declining correlation to traditional markets is a sign that the industry is maturing and is becoming less reliant on U.S. markets.
The crypto market is becoming increasingly global, with more stablecoin issuance and global crypto trading taking place outside of the U.S. This is a positive sign for the future of the industry, as it means that the industry is becoming less dependent on U.S. markets and is becoming more resilient to macroeconomic events.
Cryptocurrency and blockchain technology are still in their infancy, but the declining correlation to traditional markets is a positive sign for the future of the industry. As the industry continues to mature, it is becoming more resilient to macroeconomic events, and more global flows are driving the market than U.S. flows. This is a sign that the industry is becoming more independent and is less reliant on U.S. markets.