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Bitcoin's (BTC) destiny is now liberated from the influence of sentiment in the U.S. stock markets.

Data analyzed by crypto derivatives analytics firm Block Scholes reveals a significant shift: the 90-day rolling correlation between Bitcoin's spot price movements and changes in Wall Street's tech-heavy equity index, Nasdaq, as well as the broader index, S&P 500, has dwindled to nearly zero. This represents the lowest correlation observed in the past two years.

"It [the correlation] is now at the lowest level observed since July 2021, when BTC was between its twin peaks in April and November," Andrew Melville, research analyst at BlockScholes, said in an email.

"The fall in correlation has happened as both assets have retraced losses sustained throughout last year's tightening cycle," Melville added.

The diminishing connection between crypto and traditional risk assets implies that traders who solely rely on traditional market sentiment and macroeconomic developments may encounter disappointment.

Bitcoin exhibits a near-zero statistical relationship with Nasdaq and S&P 500. (BlockScholes, Yahoo)

 

ETF narrative

The crypto market has been infused with optimism due to the recent filings of spot bitcoin exchange-traded funds (ETFs) by prominent companies such as BlackRock (BLK), Fidelity, WisdomTree (WT), VanEck, Invesco (IVZ), and other notable players.

Since BlackRock's filing on June 15, bitcoin has delivered an impressive return of 25%, disregarding the stagnant performance observed in the U.S. stock indices.

Ilan Solot, the co-head of digital assets at Marex Solutions, presents a compelling framework for understanding the ETF narrative. He breaks it down into three integral parts: the anticipation and strategic positioning prior to the ETF launch, the subsequent analysis of post-launch flows for spot ETFs, and the overarching significance of this process in validating cryptocurrencies as a credible asset class.

"Investment product flow in coming months could be a litmus test for the latter, so I’ll be watching it closely," Solot tweeted.

Much to the bears' chagrin, investor enthusiasm for exchange-traded products has surged since June 15th.

"Globally, BTC ETPs experienced inflows of 13,822 BTC in June, with the inflows kicking in after the BlackRock announcement on June 15," Vetle Lunde, senior research analyst at K33, said in a note to clients on Tuesday, discussing the impact of the ETF narrative. "The flows have been strong across jurisdictions, with Canadian and European spot ETPs and U.S. futures ETFs all experiencing solid inflows."

Analysts informed CoinCryptoUs that although the ETF narrative currently holds significant influence, it remains essential to pay attention to certain macroeconomic factors such as potential pressures on fiat liquidity.

At the time of reporting, CoinCryptoUs data indicated that Bitcoin was exchanging hands at a rate of $30,830.