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Taken on January 8, 2021, this illustration shows the virtual currency bitcoin and a dollar bill in front of a stock chart. REUTERS/Dado Ruvic
Aug. 2 (Reuters) – It’s been a good month for Bitcoin – and we haven’t said it in a while.
After months of plunging, the stock rose more than 17% in July, its best performance since October. Ether is up 57%, its biggest monthly gain since January 2021.
The rise was in step with gains in riskier assets such as stocks as investors bet that a weak economy might discourage the Fed from aggressively tightening monetary policy.
Bitcoin’s 40-Day Correlation Against The Nasdaq Focuses On Technology (.IXIC) It is now at 0.90, up from 0.41 in January. Here 1 means that the price moves in full lockstep.
The major cryptocurrency has been consistently positively correlated with the Nasdaq since late November, meaning it has moved in the opposite direction, regularly turning negative over the past few years.
Itai Avneri, deputy CEO of crypto trading platform INX, described the convergence in July as good news.
This means that institutional investors see bitcoin like any other asset, he said. When and when the market changes, these institutions will come back and invest in crypto.
Gains weren’t limited to Bitcoin as the global cryptocurrency market was worth over $1.15 trillion last month, adding more than $255 billion since the end of June, according to CoinGecko data.
AUM in digital asset investment products rose 16.9% to $25.9 billion in July, reversing a 36.8% decline in June, according to research firm CryptoCompare.
But deals are tenuous and it is too early for many investors to get bullish in a highly uncertain macro environment that shows inflation rampant and the US and Europe looking down a barrel of recession. It shows that you think .
Average daily trading volume for all digital asset investment products fell 44.6% to $122 million, the lowest since September 2020, CryptoCompare found.
Citing inflation, recession risks and rate hikes, a Macrohive researcher said on Friday, The medium-term outlook is bearish (for cryptocurrencies) despite the current rally. This is our stance on equities. is consistent with,” he wrote.
Bitcoin is currently trading at $23,336 and is consolidating near $24,000 after hitting that level last week.
According to Chris Terry, vice president of lending platform SmartFi, trading is likely to continue in a narrow range of around $20,000 plus or minus 10% to 15% until the trajectory of the economy becomes clearer.
“We could be in this stagnant market for weeks and weeks.”
Conversely, if the U.S. enters a prolonged recession and the Fed is forced to cut rates, Bitcoin could benefit, says Russell, CEO of Valor, which creates exchange-traded products for digital assets. Starr said.
“We will have to see another quarter of a recession before we return to the very high level of $60,000,” he said.
According to Adrian Kenny, senior sales trader at Global Block, the coming months will be very exciting for investors who jumped into cryptocurrencies at a time when they surged at the height of pandemic-era accommodative monetary policy. It can be unstable.
“There is no doubt that there is still quite a bit of mountain to climb when it comes to ‘normalcy’ or the hope of returning to 2021 highs in the near future.”
Reporting by Medha Singh and Lisa Pauline Mattackal of Bengaluru. Edited by Vidya Ranganathan and Pravin Char
Our criteria: Thomson Reuters Trust Principles.
Opinions expressed are those of the author. They do not reflect Reuters News’ commitment to integrity, independence and freedom from bias under its Trust Principles.
