Bitcoin Nasdaq 40-Day Correlation Drops to 2020 Low

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Despite cooling inflation in the US this week, Bitcoin (BTC) failed to catch up with the rally in US equities and the global market. On Wednesday, July 12, major US indices like the S&P 500 and the Nasdaq Composite hit 15-month highs amid optimism about slowing inflation.

On the other hand, Bitcoin has traded down 1.28% in the past 24 hours and is currently trading at $30,358 with a market capitalization of $589 billion. After a strong rally in June last month, Bitcoin’s surge came to a halt with the world’s largest cryptocurrency entering a strong consolidation.

Tony Sycamore, market analyst at IG Australia Pty, urged investors to remain cautious at this stage. Speaking to Bloomberg, Sycamore said:

Bitcoin was an outlier in terms of widespread risk-seeking across just about every asset class after US inflation data. For me, that’s not a good sign.

He further added that the price of Bitcoin could eventually fall between $25,000 and $26,000, which is closer to its 200-day moving average, where it could find strong support.

Bitcoin and Nasdaq Correlation Most Negative Since 2020

Reports on Wednesday suggested that the US Department of Justice was selling some of the Bitcoins seized on Silk Road. This could also be one of the possible reasons for the selling pressure on Bitcoin on Wednesday.

While other asset classes showed a wave of optimism after the inflation data, Bitcoin and most of the top 100 cryptocurrencies lost ground. According to data from Bloomberg, the Bitcoin Nasdaq 40-day correlation has become the most negative since 2020.

Courtesy of Bloomberg

However, other analysts still have some optimism for BTC. John Toro, Head of Trading at the Independent Digital Asset Exchange Reserve, said: The disinflationary environment that comes after relatively rapid increases in interest rates should be good for risk assets, including cryptography. But suggestions that Bitcoin seized by the US are misplaced, highlighting the risk that some could be sold off.

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