Bitcoin’s Correlation with U.S. Stocks Has Declined: Is the Expected Outcome on the Horizon?
Cryptocurrency analytics company Glassnode stated that the long-running bottom-forming process in the Bitcoin market is beginning to strengthen, but a sustained recovery requires the activation of spot market demand.
According to Glassnode’s analysis, Bitcoin reacted more strongly than major stock indices to the better-than-expected US inflation data released last week. The company noted that this was one of the strongest price reactions Bitcoin has given to positive macroeconomic developments in recent weeks.
The analytics company noted that the relationship between Bitcoin and stock markets has weakened, while the inverse correlation with the US dollar has strengthened. According to Glassnode, this indicates that global liquidity conditions, rather than risk appetite, are becoming the determining factor in Bitcoin’s price.
The report stated that long-term investor capitulation, a major source of selling pressure on Bitcoin throughout the year, has begun to decline from its peak. It also noted that profit-taking has largely dried up, and the supply from the June lows has been met by broad-based buying.
Glassnode noted that the ready-to-sell supply, which has previously limited every rise in Bitcoin, has begun to thin. This development, it was stated, allows the price to retest the resistance zones ahead.
According to Glassnode, Bitcoin’s biggest resistance will be the Short-Term Investor Cost Base, which is around $69,000. This level represents the average break-even price for investors who have recently entered the market.
The company stated that a strong market reaction could be seen if Bitcoin reaches the $69,000 region. For the price to rise above this level with the support of spot buying and maintain its position there is critical to confirming the recovery.
Related News A Cryptocurrency Platform Was Hacked: Major Losses Reported – Transactions Suspended
The analysis highlighted that investors in derivatives markets have begun reducing their short positions, but this move has not yet been supported by buying in the spot market. Glassnode stated that the missing piece in the current recovery outlook is strong and sustainable spot demand.
Glassnode warned that despite positive signals, a bullish move in Bitcoin has not yet been definitively confirmed. Key risks cited include continued outflows from spot Bitcoin ETFs, the failure of derivatives market position unwinding to translate into spot purchases, and volatility remaining at low levels.
According to the company, the key signal that will positively change the current market outlook is when spot market purchases push Bitcoin above the short-term investor cost basis and the price holds above that level.
Conversely, a renewed acceleration of loss-making sales by long-term investors, or a rejection of Bitcoin from the resistance around $69,000 and a retracement towards the current price level, could drag the market back into its current horizontal trading range.
Glassnode stated that while a price base has largely formed in Bitcoin, the buying momentum needed to sustain the uptrend has not yet emerged, commenting, “The base has formed, but the continuation of the movement has not yet arrived.”
*This is not investment advice.
