Recent insights from IntoTheBlock reveal that Bitcoin (BTC) is no longer closely correlated with the S&P 500, with their correlation dropping to zero. This level hasn’t been seen since November 2024, right before Bitcoin’s remarkable ascent past $100,000 per BTC.
It remains uncertain how long this divergence will persist and whether we will witness a repeat of the positive momentum observed in November.
One positive aspect is that the influx of crucial macro data may lead to more favorable conditions for the cryptocurrency market. For instance, the recent CPI data exceeding expectations significantly influenced Bitcoin and other cryptocurrencies, causing noticeable drawdowns across the sector.
However, this does not imply that cryptocurrencies will remain unaffected by traditional financial market data; they will likely develop their own response patterns to such news.
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Furthermore, Bitcoin has recently been perceived as a beta to tech stocks. In a stagflation scenario, this correlation might present significant risks for the leading cryptocurrency. On a more optimistic note, Bitcoin’s reputation as digital gold could provide it with a favorable outlook during challenging economic times.
Bullish for BTC, not for crypto?
Even though Bitcoin has detached itself from the S&P 500, its connection to gold remains robust, which could prove beneficial. However, altcoins tend to respond more like stocks, and their prospective futures are not assured, even if Bitcoin maintains its upward trajectory.
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Currently, the market may be optimistic about Bitcoin’s strength in the near future, and BTC’s dominance could increase as gold hits new all-time highs. Nonetheless, another downward trend for altcoins seems probable if dire economic conditions come to pass.
