The crypto market is experiencing a surprise bounce. Bitcoin has rallied from the $18K-$19K range to cross the $20K mark. It has increased by over 5% in the last 24 hours and is currently trading at $20.1K. However, since the stock markets are dumping, Bitcoin looks to break the correlation.
Ethereum is also experiencing a strong rally for the first time after the merge. Ethereum has bounced over 6% in the last 24 hours and is set to cross the $1.4K mark. It is currently trading at $1381.
Solana (+7%), Polygon (+5%), and Terra Classic (+56%) are some of the biggest winners of the crypto market.
Is Bitcoin Breaking Correlation With The Stock Market
The bounce in the crypto market is surprising because the stock market experienced a sell-off. S&P 500 fell by over 1% while NASDAQ-100 fell by 0.5%. The crypto market is strongly correlated with the broader market.
Coinbase Research highlighted that crypto is correlated with the traditional market with a beta of 2. It behaves close to the tech stocks and the tech-oriented NASDAQ. Before 2020, there was no correlation between the two. For Bitcoin to work as an inflation hedge, it must consistently perform despite a sell-off in the broader market.
However, Kevin Svenson, a major crypto influencer, believes that Bitcoin is still dependent upon the stock market. Lesser speculation than the S&P 500 is the reason for Bitcoin’s bounce back. Svenson reveals that just as crypto did not bounce back as fast as S&P 500, it is not dumping as fast either.
The pause in the dollar’s rally is also a reason for the crypto’s strong showing. Svenson believes that Bitcoin bulls will hope that the stock market rallies as well. Otherwise, crypto is doomed to fall again.
Key Events To Watch
The crypto market will hope for a bounce back in the stock market. Fed chair Jerome Powell’s speech can play a huge role in any movement. He is due to give his speech today.