That’s right, the correlation between Bitcoin and U.S. stocks is hitting a record high


That's right, the correlation between Bitcoin and U.S. stocks is hitting a record high

On March 12, due to the panic caused by the rapid spread of New Coronary Pneumonia, the price of bitcoin fell sharply on a single day, and the rest of the cryptocurrencies generally followed suit. Most cryptocurrencies fell more than 30% weekly.

Source: Coin Metrics Reference Rates

The latest Coinmetrics report analyzes the reasons for the crash, specifically pointing out that the correlation between Bitcoin and S & P hit a record high. At the same time, data shows that short-term investors have promoted the large-scale selling of cryptocurrencies.

相关 BTC and S & P correlation reach record high

历史 BTC's historic one-day price decline coincided with the worst day in the US stock market since 1987. On March 12, the Pearson correlation coefficient between BTC and the S & P 500 soared to an all-time high of 0.52, the previous record high of 0.32. This shows that the crypto asset market is increasingly connected to existing traditional markets and is more sensitive to external events than ever before.

Source: Coin Metrics Reference Rates

Over the past week, the bitcoin price has responded to several key events, including President Trump's announcement of a 30-day travel ban between the United States and Europe, and the Federal Reserve's announcement to reduce the federal benchmark interest rate to 0.00% -0.25% Levels and more. Below is a comparison of the timing of some key events over the past week with the price of Bitcoin.

Source: Coin Metrics Reference Rates

BTC sellers seem to be mainly short-term holders

According to the data on the blockchain, the recent sell-off of bitcoin transactions has mostly come from relatively short-term traders and recent entry holders. At least so far, long-term holders remain bullish.

MeCoin Metrics' Supply Activation Index tracks how many coins that have not moved during a particular period of time re-enter circulation. On March 11, approximately 281k bitcoins that had not been moved within 30 days re-entered circulation, while only 4,131 bitcoins that did not move within one year entered circulation. This shows that the two-day trend on March 11 and March 12 involved bitcoin with little one-year long-term holders.

https://preview.redd.it/3nh814wr8fn41.png?width=700&format=png&auto=webp&s=e57322372ebb70f1607c3beb26a832d42e9fcbf0

March 11 is the fourth largest peak in the number of unremoved bitcoins in the past eight years and 30 days.

https://preview.redd.it/pqdyx40v8fn41.png?width=700&format=png&auto=webp&s=0961fe5006aff0f9dbc83875fbdd5d113674ab2f

Long-term holders have not wavered, and the number of Bitcoins that have not moved and re-entered into circulation during the one-year period has not increased abnormally.

BTC MVRV index drops below 1

MVRV above 1 indicates that speculators value the market higher than holders, and MVRV below 1 indicates that holders value the market higher than current speculators. When the MVRV is lower than 1, it is not so easy for the holder to immediately sell for a profit.

MVOn March 12, the MVRV index fell to 0.5, the largest one-day drop since December 2013. It turns out that the period when the MVRV index fell below 1 in the past is also the best time to buy more Bitcoin at a discounted price.

https://preview.redd.it/7yh06vq49fn41.png?width=700&format=png&auto=webp&s=0fe23df28a05e53fee318877fa11ec60518530aa

to sum up

MetricCoinmetrics finally concluded that after a crazy sell-off in the past week or so, although the price of bitcoin has fallen sharply, multiple figures are reassuring. The sell-off seems to be mainly caused by short-term investors stepping on fear, and long-term holders have so far been relatively stable. At the same time, as Bitcoin MVRV dropped below 1, it seems to have entered the historically attractive price-sucking range.

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