Bitcoin may be correlated to stocks across only ‘certain stretches’
The number of Bitcoin narratives that have been drawn out and explored during times of volatility is always interesting to note. Over the past few weeks, however, the main topic of every major Bitcoin discussion is its increasing correlation with the traditional stock market.
With many analysts suggesting that it is a key turning point for Bitcoin in terms of its future prospects in the market, a certain Bitcoin proponent believes that the correlation aspect may not matter anymore.
In a recent interview with BLOCKTV, Tone Vays, popular crypto-trader and commentator, suggested that Bitcoin has already capitulated and it will not register another low.
During the interview, Vays was queried about Bitcoin’s recent dalliance with stocks. With the global financial market still fighting off concerns of another meltdown, Vays believes that despite being correlated with traditional market indexes, Bitcoin is correlated “only in stretches” with the industry.
“When people are losing their jobs, and the stock market is also crashing, Bitcoin will probably crash too but the difference right now, going into the 2nd half of the year, is that Bitcoin had its capitulation.”
Additionally, Vays admitted that even though Bitcoin is still correlated to an extent with stocks, it will not register another low, whereas indices such as the S&P 500 and Dow Jones may register another lower low soon.
Vays’ capitulation argument can be verified by the attached chart.
Since the start of 2020 and even prior to that period, Bitcoin had managed to attain levels above the support level of $6500. After the flash crash on 13 March, however, the world’s largest cryptocurrency fell below that mark. And while Bitcoin has taken a bit more time since 2 April, the crypto-asset has failed to consolidate under the $6500 mark for more than 24-hours.
With trading volume significantly rising over the past few weeks, Bitcoin trading between $6200 and $7000 is strong, something that suggests the formation of a local low at the support level at $6500. The VPVR’s Point-of-Control was also stretched at $6676, further strengthening the local bottom argument.
Vays also had an interesting take on the possible entry of investors into the market. According to him, the traders entering the current market are possibly old investors that avoided getting rekt in the previous month’s collapse. He dismissed the notion stipulating the entry of new traders because he believes that someone new to the ecosystem would still be wary since the market fundamentals continue to project bearish Bitcoin sentiments in the long-term.
Vays’ point of view is supported by the fact that the number of BTC active addresses since the crash hasn’t been rapid enough to suggest an influx of new investors, with the market continuing to be turbulent.