Bitcoin Now Awaits The ‘First Week of the Year Effect’ After Lack of ‘Santa Claus’ Rally

The market is struggling to turn bullish as price takes a dip ahead of massive year-end options expiry on Friday, with the “max pain” point at $48k.

Bitcoin took a dip back towards $47,300 on Tuesday, unable to keep the gains made on Monday when it briefly hit $52k. While Bitcoin is down nearly 31% from its all-time high of $69,000, Ether, which dropped back to $3,760, is 22% off its $4,880 ATH.

These two major crypto assets continue to trade in a range, unable to rally into the year-end. Even the stock market is doing better than these leading cryptos.

The S&P 500 hit a record high on Monday but is now showing signs of petering out. Now, the dollar is inching up, but with traditional market traders taking time off for Christmas for the end of the year, it’s better not to read too much into the moves.

“Things are mostly noise right now, though we are probably seeing a soft risk-on/risk-off dynamic going on with stocks down slightly, and the dollar has caught a bid on the inverse of that,” said Kyle Rodda, an analyst at IG Markets.

But unlike the S&P 500, Bitcoin failed to see a ‘Santa Claus rally,’ and the next thing the crypto market is looking for is the gains that come in the first ten days of the month and the year.

As trader and economist Alex Kruger noted, it is the ‘first week of the year effect’ that saw Bitcoin’s returns in the first week of 2021 at 36%, 13% in 2020, 7% in 2019, and 18% in 2018.

“Still expect a strong crypto up market in early Jan driven by fund inflows. Then risk-off ahead of the next FOMC (Jan/26) if the next inflation print comes in too hot (Jan/12),” Kruger added.

But as Bitcoin is on course for its worst monthly drop since the rout seen in May, down 16.5% in December, less than Ether’s more than 18% loss, many are struggling to be a bull.

“A similar purely deriv phenomena (at diff magnitude) I see dec-4-2021 vs. sep-24-2019 nuke is pre-nuke mkt ran out of longs opening (apes gone?), post nuke still the same, funding flipped flat (once in a while, mildly negative), no apes to re-ape mkt back into froth, big chop maybe,” stated trader CL of eGirl Capital.

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Demand for risky assets has been waning as the year comes to a close, in part as the Federal Reserve starts pulling back on the stimulus.

There’s talk of “a leveraged unwind in Bitcoin longs going into year-end,” said Ben Emons, global macro strategist with Medley Global Advisors, adding that “could be a damper on risk sentiment for a very brief period.”

Based on the Fibonacci retracement, the next level of support for Bitcoin is around $44,200. Many still see the slow action over the holiday period of thin liquidity exacerbating the price moves.

“While spot prices have been trading in a relatively tight range (before the dip today), vols have been telling an interesting story,” noted QCP Capital, Asia-based digital asset traders.

According to QCP Capital, the potential reasons for the spike in volatility and the getting sold down even harder include realized vol underperforming and market rolling short-vol carry positions ahead of the massive year-end expiry on Friday.

A total of 129,800 options contracts worth over $6 billion are expiring this Friday. Bitcoin tends to move toward the “max pain” point in the lead-up to expiration, and for this options expiration, this point is $48k.

Moreover, market makers are getting increasingly long altcoin volatility, but with the absence of volatility markets for these native tokens, “market makers are forced to sell vol in BTC and ETH instead as a proxy.”

“Our position into the new year is net long gamma, short vega (in BTC and ETH), and long wings (far strikes),” stated QCP Capital. “We haven’t really seen that massive short squeeze that we’ve been expecting, but perhaps the calendar turn would produce some fireworks in thin markets.”

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Author: AnTy

Over 77% of the SOS Airdrop Was Claimed by OpenSea Users

The biggest claim was 63.6 billion SOS tokens, while the smallest was just over $6. The token price is down 43% from its all-time high hit on Christmas Day.

On Christmas day, OpenSea users got a free ERC-20 token called SOS based on how much money they had spent on the popular non-fungible token (NFT) marketplace.

In the last less than three days, just over 77% of the users have already claimed their airdrop, according to Dune Analytics. More than 300,000 addresses were eligible for the 50 trillion SOS token airdrop.

Out of the 38,668,455,245,421 SOS tokens claimed, the biggest claim was of 63,603,617,192 SOS (worth more than $400k currently) while the smallest was 982,236 SOS (just over $6).

Twenty trillion SOS tokens (worth about $130 million) went to the team’s treasury, while another 20 trillion SOS tokens were allocated for staking incentives and 10 trillion SOS for liquidity incentives.

As of writing, SOS is trading at $0.0000063, down nearly 21% in the past 24 hours and over 43% from its all-time high of $0.00001108 hit on December 25.

The maximum supply of SOS is 100 trillion, but the supply available in the market is 38.6 trillion SOS, which puts its market cap at $257 million.

While SOS tokens have been airdropped to OpenSea users, the airdrop was not conducted by the platform rather by OpenDAO, an independent decentralized autonomous organization to support the NFT industry. OpenDAO was created by a pseudonymous developer called 9x9x9.

OpenSea, the company, recently faced backlash when the newly appointed CFO hinted at plans for an IPO instead of rewarding its users and community with a token airdrop.

In order to claim your SOS, you have to visit OpenDAO’s website, connect your crypto wallet — OpenDAO supports MetaMask, Coinbase Wallet, and WalletConnect — and hit “initiate claim.”

The SOS airdrop depends on how much you have used OpenSea, basically how much ETH, USDC, or DAI you’ve spent on the platform prior to December 23. To claim your tokens, you would also have to pay the gas fee.

Ethereum network is notorious for very high gas fees during periods of high activity, so you might want to take your time before claiming. There isn’t any rush for that either, as the OpenDAO has said that you have until June 30, 2022, to do so, after which unclaimed tokens will be sent to the DAO treasury.

Interestingly, since the launch on the weekend, already major crypto exchanges Huobi, OKEx, KuCoin, and Gate.io have listed the token. And you can, of course, also trade it on DEX like Uniswap.

“Anyone can show up to a massively successful project and draft on their community and if you offer something more interesting/rewarding etc., leapfrog your way into a very motivated Minimum Viable Community overnight,” commented Alexis Ohanian, the co-founder of Reddit founder of fund SevenSevenSix which is also investing in crypto projects, on the SOS airdrop.

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Author: AnTy

Is This The Beginning of the Santa Rally? Markets Jump in Asia Session

The crypto market is green again going into the weekend.

Bitcoin rose to $51,500 on Friday in the Asia trading session during the winter festival season with thin liquidity.

While sentiments are turning, Bitcoin hasn’t got out of its range yet and is still down 25.6% from its all-time high of $69,000.

Ether meanwhile went past $4,150 and is still keeping above $4,100. But cryptos that are leading the greens involve SAND (24%), AR (22%), and LUNA (17%). Even DeFi coins like SUSHI and AAVE are seeing a spike in their value.

The total market cap has now jumped back above $2.5 trillion.

The crypto fear and greed index is also slowly recovering in tandem with prices. At a reading of 41, the sentiments have recovered into just fear territory, while just last week, there was ‘extreme fear’ in the market at a reading of 23.

This could also be in open interest for Bitcoin futures which have reached $20 bln yet again, from under $16.5 bln at the end of the first week of December. However, we still have a way to go with the all-time high sitting at $28 bln from last month.

All this while, the funding rate is still low, with the highest being 0.0125% on OKEx for USDT margined Bitcoin contracts while lowest at -0.0113% on OKEx again but for token margined contracts.

For Ether, OI has climbed to $11.36 bln, up from $9.50 bln just over a week back and fast climbing towards $14.5 bln ATH in early November.

The crypto market’s latest gains came amidst the wider positive sentiment in financial markets. Risky sentiments have improved in global markets, as seen in Thursday’s record-high close for the S&P 500.

While the receding tide of central bank liquidity is expected to put a dent in demand for risky assets, it is yet to be seen in the market as prices go up.

“Even in an environment where the Fed raises interest rates, investors and businesses will be hungry for the high-yield opportunities offered through digital assets. So expect to see institutional adoption of digital assets balloon — directly, through ETFs, or custom yield-generating products,” said Jeremy Allaire, CEO of Circle, in an interview with CNBC.

Most Asia share markets edged higher on Friday while the greenback headed for its worst week since September as risk assets record gains amidst ebbing concerns over the severity of the new COVID-19 variant Omicron.

Meanwhile, the US stock market and Treasury markets will be closed on Friday for a holiday, but the Nasdaq and S&P 500 futures gained 0.8% and 0.66%, respectively, in Asian hours.

“Cautious optimism that Omicron is less severe than Delta is supporting risk assets,” said FX analysts at CBA in a note.

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Author: AnTy

Paraguayan Senate Passes Bill to Regulate Crypto Trading and Mining

The Senate of Paraguay has passed a bill that will regulate the trading and mining of cryptocurrencies in the country.

Paraguayan Senator Fernando Silva Facetti, one of the three authors of the bill, confirmed this on Twitter, saying Paraguay’s Chamber of Deputies will discuss the bill next year.

After an “intense debate” that the Senate approved the bill that regulates the industry and commercialization of crypto assets, said Facetti.

In July, Paraguayan congressman Carlos Rejala presented a bill to regulate crypto ownership and registration of crypto mining operators.

Paraguay’s low cost of electricity is the main attraction for crypto mining companies. Besides being the lowest in the region at around $0.05 per kilowatt-hour, the South American country produces 100% of its energy via hydroelectric sources.

The bill states that Paraguay only consumes a third of the energy it produces, and regulating crypto mining activity could help them consume “thousands of megawatts” that they currently have in “surplus.”

With the new legislation, Facetti said, Paraguay aims to recognize crypto mining as an industry and establish the grounds to guarantee access to energy and requirements for the formalization of an expanding sector.

He further said, for crypto transactions, the National Securities Commission (NSC) will establish the registration requirements for intervening agents for negotiation, compensation, custody, and intermediation in the securities market.

The bill proposes a registry for any individual and the legal entity seeking to provide crypto trading and custody services.

According to the bill, the country’s Industry and Commerce Secretariat will supervise crypto mining along with the NSC, Anti-Money Laundering Office, and National Electricity Administration.

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SEC Postpones Decision on Grayscale and Bitwise Bitcoin Spot ETF to Early February

The US Securities and Securities Exchange Commission (SEC) continues to delay the physically-backed Bitcoin exchange-traded fund (ETF) from trading.

Earlier this month, the SEC rejected WisdomTree’s application for a spot Bitcoin ETF after delaying it in June. A week ago, the asset manager amended its filing with “significant protection” for investors.

This week, the SEC has postponed two Bitcoin ETF proposals: Bitwise Bitcoin ETP Trust and Grayscale Bitcoin Trust’s conversion to Bitcoin ETF to February 1 and 6, 2022, respectively.

“The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the comments received,” said the regulator in its statement.

Back in mid-October, asset manager Bitwise filed for a spot Bitcoin ETF which would provide exposure to “actual BTC” rather than indirect exposure through Bitcoin futures. Bitwise also filed a Bitcoin futures-based application but dropped it in November.

In October, the Proshares Bitcoin Strategy ETF (BITO) became the first futures-based Bitcoin ETF to make its debut. The first-mover advantage saw it amassing more than $1 billion in assets. Two other Bitcoin futures ETFs have since then begun trading, but they manage to attract only a fraction of BITO’s funds.

Meanwhile, the world’s largest digital asset manager, Grayscale, filed an application on Oct. 19 to convert its flagship Bitcoin Trust holding $30.8 billion in assets into an ETF.

As we reported this week, Coinbase also sent a letter to the SEC in which it urged the regulator to approve Grayscale’s application arguing that treating spot Bitcoin ETPs differently from futures-based ETPs can “undermine confidence” in the agency.

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WisdomTree Yet Again Amends Spot Bitcoin ETF Filing After SEC Rejection

The changes will apply “certain of the substantive requirements” of the 1940 Act to offer investors “significant protections” but won’t be registered under the Investment Company Act.

Asset manager WisdomTree is not giving up the fight for a Bitcoin exchange-traded fund (ETF) and has amended its filing again.

The Bitcoin Trust (BTCW) is not registered under the Investment Company Act of 1940, which the US Securities and Exchange Commission (SEC) Chair Gary Gensler has been supporting, resulting in the launch of three Bitcoin Futures ETFs.

But, according to the filing, it is “applying certain of the substantive requirements” of the ‘40 Act to provide investors with some of the significant protections under the Act.

As such, the Trust will custody its assets, in compliance with Act, at a bank meeting the requirements. The Trust will also provide daily disclosures required for ETFs, including its portfolio holdings; a daily update on the net asset value per share, market price and any premium or discount; the number of days it traded at a premium or discount; discuss the factors if premium or discount remains greater than 2% for seven consecutive trading days, and median bid-ask spread. All this information will be publicly accessible and free of charge.

In accordance with the ‘40 Act, the Trust will have its financial statements audited, maintain a fidelity bond for the benefit of the Trust in the maximum amount required, and maintain the books and records of the Trust.

Additionally, the Trust will ensure that there are no transactions with affiliated persons that would be prohibited by Act.

Further, the Trust will use an independent pricing source in valuing its assets with inputs from the same bitcoin trading platforms and the same methodology as is used by CME to price its Bitcoin futures.

These latest changes come after a week of the SEC disapproving WisdomTree’s spot Bitcoin ETF. The agency declined the ETF after postponing the decision on the application several times this year. It was initially filed in late March.

Last Wednesday, the SEC rejected the proposed rule changed from the Cboe BZX Exchange to list and trade shares of WisdomTree’s Bitcoin Trust, saying it still does not “prevent fraudulent and manipulative acts and practices” nor “protect investors and the public interest.” The filing said,

“The Commission cannot conclude, based on BZX’s statements alone and absent any evidence or analysis in support of BZX’s assertions, that it is unlikely that trading in the ETP would be the predominant influence on prices in the CME bitcoin futures market.”

WisdomTree’s Ethereum Trust is also under SEC review, first submitted to the agency in May.

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“Extreme Fear” in Crypto As The Market Weakens on Monday on Expectations of “Aggressive Tightening”

The price action faltered after the initial risk-on with all eyes will be on the consumer price report due on Friday. The USD index is near its 17-month high and dollar long positions highest since June 2019.

Last week, the market was spooked by the mixed US jobs report that has investors now expecting a more aggressive tightening by the Federal Reserve.

US payrolls were underwhelmed in November, but at the same time, there was a 1.1 million jump in jobs that pushed unemployment down to 4.2%.

“We think the Fed will view the economy as much closer to full employment than previously thought,” said Barclays economist Michael Gapen.

“Hence, we expect an accelerated taper at the December meeting, followed by the first rate hike in March.”

This week all eyes will be on the consumer price report due on Friday. The key US inflation figure will tell the market more about the early tapering and increase in interest rates.

As Omicron emerged in more countries, Asian share markets had a cautious start on Monday. While the new COVID-19 variant remains a concern, there are reports that cases had mild symptoms.

There was slight risk-on price action in the new week that saw crypto assets recording a small uptick. After momentarily going for $49,455, Bitcoin slid back down towards $47,000. As for Ether, it is back under $4k after recovering to $4,255 over the weekend.

The total crypto market cap is still struggling under $2.3 trillion as the sentiments turn to “extreme fear,” at a level not seen since July.

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In the global stocks market, Japan’s Nikkei eased some despite the government considering raising its economic growth forecast to account for a record $490 billion stimulus package.

On Wall Street, after the worst start of December in two decades, S&P 500 added 0.4%, and Nasdaq futures 0.1%.

But with the Fed turning increasingly hawkish, BofA chief investment strategist Michael Hartnett is bearish on equities for next year as he expects a “rates shock” and a tightening of financial conditions while favoring real estate, commodities, volatility, and cash.

Short-term Treasury yields are now being pushed higher. Ten-year U.S. yields also rose off but are still down from 1.669% two weeks back.

The USD index remained around 96.25, near the 17-month high of 96.9, which it hit in late November. As we reported, dollar-long positions have also climbed to the highest since June 2019.

“We expect the dollar to rise as markets price in more rate hikes,” said Commonwealth Bank of Australia strategist Kim Mundy.

“This week’s November CPI data could trigger markets to price in a more aggressive tightening cycle.”

Much like risky assets, gold has also been getting hit since mid-November, when it was around $1,875 per ounce to slide down to $1,760 on Friday. Currently, the bullion is trading under $1,780.

The safe-haven yen has also eased some with the cautiously brighter mood this Monday, though a bumpy ride ahead looms with Omicron and U.S. inflation data. Next week the Fed, European Central Bank (ECB), Bank of England (BOE), and Bank of Japan (BOJ) will be meeting.

“Omicron headlines are moving in the right direction, and the risk-off sentiment may ease off soon,” said analysts at OCBC Bank in Singapore.

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Dollar Sends Warning Signs for Risky Assets including Bitcoin and Crypto

The US dollar has hit a new all-time high today at 96.6, last seen in mid-July 2020. In mid-March last year, USD went as high as 103, and after bottoming out in late May and early June, it has been mostly trending up ever since.

The latest uptrend in USD came as Federal Reserve Chair Jerome Powell was reappointed for a second term, encouraging bets on higher US interest rates.

With the Fed already announcing the paring of its bond purchases, the growing expectation for tighter monetary policy and an acceleration in economic data has the dollar well-positioned against other major currencies.

As we have been noting, the slowdown or removal of liquidity from the market is not good for the prices of risky assets, which could negatively impact crypto prices.

“A stronger greenback would have you believe the same tailwinds that propelled global asset prices—including BTC and crypto—over the last 18 months are starting to reverse course,” commented Delphi Digital.

Already, this week, crypto-asset prices tumbled, with Bitcoin going to $55,600 and Ether to $4,020.

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As a result, funding rates are resetting and even briefly turning negative since last week as after hitting ATH at $69,000 two weeks back, the market has been struggling to be bullish.

On most exchanges, funding rates are hovering in neutral territory, the highest on OKEx at 0.0257%, indicating bullish demand is muted. At $23.36 bln, Bitcoin’s open interest meanwhile remains significantly higher than September lows of $13.11 bln but down from $28.85 bln ATH on Nov. 10.

This USD is also rallying to a 16-month high amidst renewed lockdown fears in Europe after last week investors sought a safe haven on inflation worries. Surging US inflation and the prospect of a sooner than expected rate hike by the Fed has helped DXY run higher, putting pressure on riskier assets and emerging market currencies.

Emerging markets are already struggling with rising inflation and especially as the dollar strengthened. The Turkish lira (TRY) actually hit record lows against the USD.

This devaluation of lira since September (-35%) has been mirrored by strong growth in BTC-TRY trade volumes, noted digital asset data provider, Kaiko. The increase comes despite Turkey banning the use of crypto for payments back in April.

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According to Chainalysis, currency devaluation has been among the main drivers of crypto adoption in the country, accounting for a large percentage of crypto use in the Middle East.

Meanwhile, the Turkish central bank has cut its policy rate by 100bsp, further contributing to the lira’s historic meltdown. “This could favor crypto assets which are seen as a more stable investment alternative,” said Kaiko.

The post Dollar Sends Warning Signs for Risky Assets including Bitcoin and Crypto first appeared on BitcoinExchangeGuide.

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Author: AnTy

Crypto Drivers Still looking “Incredibly Optimistic,” BTC Purchases Already Affecting “National Accounts”

The US Fed Governor calls Bitcoin “electronic gold,” says crypto is another asset “you can choose to hold. You can choose gold or bitcoin.”

Finally, into the weekend, cryptocurrencies are registering some greens.

After Bitcoin fell under $56k and Ether went below $4k on Friday, today we went as high as nearly $59k and $4,340, respectively. As of writing, BTC/USD is trading around $58,500, and ETH is hovering around $4,300.

The total crypto market is also slowly recovering from $2.59 trillion to back above $2.75 trillion.

“This correction seems more like a natural breather in a bull run, as well as a healthy flushing out of leverage,” said Noelle Acheson of Genesis Global Trading.

While some have started to doubt the bullishness of the market after the recent weakness, money hasn’t stopped flowing into the cryptocurrency industry. While in the private market, crypto firms continue to raise millions and billions of dollars to build the infrastructure, crypto products are also attracting money though the flow has subdued.

“It alludes to the fact that we’re also not overheated at the 60K market. There’s still a good way to go,” said Justin d’Anethan of crypto trading firm EQONEX.

Hunter Horsley, CEO of Bitwise, is of the same opinion based on “fundamental thesis and drivers of the space,” which he says “continue to look incredibly optimistic.”

Even global markets are consolidating after the gains recorded by the US dollar and bond yields in recent weeks.

Growing Adoption

This year crypto adoption has gone mainstream, with institutions pouring in. Australia is also joining in with its biggest bank, the Commonwealth Bank of Australia, to start offering its users the ability to buy, sell, and hold crypto because the bigger risk is not participating.

However, the county’s $2.4 trillion pension fund industry is still not all aboard. Ross Barry, who oversees A$27 billion at superannuation fund Spirit Super, said long-term funds have to watch how the sector develops, but volatility makes crypto “too risky to be considered for institutional portfolios.”

Not just user adoption, but countries are also recognizing crypto’s potential, with India planning to regulate crypto as an asset class. Also, Brazil’s central bank chief Roberto Campos Neto is saying that they are discussing a bill on how to regulate crypto as an investment class due to Brazilian purchases of bitcoin starting to affect import data.

“They have already started to affect national accounts, which means they have become an important instrument,” he said, adding, he wants to get more clarity on the government’s plan for cryptos.

Campos Neto also said that inflation expectations for next year are rising and shifting “a bit” away from their target, which the bank has been trying to control by raising interest rates. In addition, the Brazilian central bank is likely to revise its forecast for the country’s GDP growth next year to downwards, which currently stands at 2.1%.

“You Can Choose Gold Or Bitcoin”

Besides crypto, gold also fell to a one-week low on Friday, weighed by the gains in the US dollar and after Federal Reserve Board Governor Christopher Waller said Bitcoin is digital gold.

Waller also said the Fed should increase the pace of tapering to give more leeway to raise interest rates from virtually zero. An increase in rates and draining the liquidity from the system, however, is not good for the crypto market as during the last bull market, it “took the wind out of the sails of crypto was when interest rates rose, and liquidity was draining from the system,” said Jamie Cox, managing partner at Harris Financial Group.

On Friday, during a discussion with the Center for Financial Stability, when asked about the risks digital assets pose, Waller said,

“Bitcoin to me is basically electronic gold.”

“It doesn’t have any fundamental intrinsic value, but that’s okay. We’ve known from economics since 1958 that useless objects can have value.”

Most of the thousands of cryptocurrencies in existence have “zero value,” said Waller adding, Bitcoin is different.

“Once they pick up, then they become like electronic gold. They’re another asset you can choose to hold. You can choose gold or bitcoin, I don’t care. We don’t sit there worrying about gold prices destabilizing the financial system, per se.”

Meanwhile, the Fed official sees DeFi presenting new opportunities in terms of smart contracts, which are “amazing” and can be used to do “pretty impressive stuff with,” Waller said.

“There’s instant clearing and instant settlement…. So I think it has actually a lot of potential for trading going forward.”

Earlier this week, Waller also commented on stablecoins, saying while he understands the regulators wanting to force a new product into an old structure that would eliminate stablecoin’s key benefit arrangement of serving as “a viable competitor to banking organizations in their role as payment providers.”

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Author: AnTy

Bitcoin’s Longest Slump Since May Severs its Pandemic-era Correlation With Tech Stocks

The beating continues in the cryptocurrency market as Bitcoin drops to as low as $55,700 on Thursday and Ether to $3,970. This has the total cryptocurrency market cap dropping to $2.56 trillion.

Some crypto assets like Loopring, Fantom, SHIB, NEAR, Zcash, LINK, and Kusama have fallen as much as 20% to 27% in the past week. Still, a few cryptos are enjoying gains, with The Sandbox, MANA, and Crypto.com up 50% to 75%.

For the fifth consecutive day, Bitcoin slipped, which is the longest slump since mid-May. The cryptocurrency has dropped below its average prices over the last 50 days. According to Matt Maley, chief market strategist for Miller Tabak + Co., $54,500 is the next important level with a drop below $50k to raise “serious warning flags.”

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Now, ahead of the weekend, Bitcoin is back around $57k while Ether is above $4,100 that has the overall market cap now aiming for $2.6 trillion.

“The pullback, while sharp, has not impacted our positive intermediate-term gauges. Short-term oversold conditions are within reach for Bitcoin, Ether, and many altcoins,” said Katie Stockton, founder of research firm Fairlead Strategies. “So we would look for their collective pullback to mature later this week.”

With the latest weakness in the market, the correlation between Bitcoin and Nasdaq 100 futures is evaporating.

The 30-day correlation between the leading cryptocurrency and the Nasdaq futures has fallen to almost zero in recent days, which hit a 2021 peak at the end of September at 0.56, suggesting Bitcoin and tech stocks were moving in tandem often.

The correlation between Nasdaq and Bitcoin has been generally positive since February last year. But since September-end, Bitcoin is up 40%, surpassing Nasdaq 100’s 11% increase. Last week, Bitcoin hit a new all-time high at $69,000, emerging as an inflation hedge.

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However, according to Carsten Menke, head of next-generation research with Bank Julius Baer in Zurich, this evolution of the relationship between the cryptocurrency and Bitcoin doesn’t support the argument that it is a reliable, modern-day store of value for portfolios.

The lack of a consistent and negative correlation between them suggests that Bitcoin is not yet a safe haven, he said, stressing that during times of financial-market stress, it tends to suffer like other riskier assets.

Defending Bitcoin, Esme Pau, an analyst with China Tonghai Securities, argued that bitcoin is a “sensible” way of buffering against inflation.

“I would urge investors to focus on the longer-term trend and do not think short-term changes in correlation should be considered representative,” she said.

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Author: AnTy