Bitcoin Price Continues To Fall With Seven Daily Red Candles Cryptocurrency

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Bitcoin and the S&P 500

In our last monthly report, which largely focused on the evolving macroeconomic environment, we highlighted the strong correlation between bitcoin and equities over the course of 2020, while also referring to bitcoin as a quasi-24/7/365, inverse VIX (currently). Typically, this means that when stocks go higher, bitcoin has also gained momentum; and when stocks sell off (likely alongside a rise in the VIX), bitcoin would also come under downward pressure.

Market participants should remember that following the LUNA/UST implosion, bitcoin consolidated around $30,000 for nearly a month before equity market volatility spiked as stocks fell again, causing bitcoin to fall without key support.

As stocks continue to bid, bitcoin's price action has started to turn around significantly, but while the S&P 500 rallies while bitcoin fails to follow.

Typically, when stocks go up high, bitcoin has also gained momentum

So what stands out about the current trend? Well, both markets have exogenous variables that can affect historical prices and realized correlations. As stocks continue to bid, due to passive flows and a compression from late bearish positioning, bitcoin’s price action has begun to turn around significantly, its short compression in the derivatives market ending. already largely producing.

Bitcoin is notably in the middle of its seventh consecutive red daily candle (closing price lower than opening).

As stocks continue to bid, bitcoin's price action has started to turn around significantly, but while the S&P 500 rallies while bitcoin fails to follow.

Bitcoin had seven consecutive daily red candles while the S&P 500 had a small uptrend

Given that equities have seen a broader uptrend, the short-term underperformance is a concern for bulls, as one has to wonder where bitcoin will trade if/when equity markets decline and/or market volatility historical market increases significantly.

While this question focuses less on long-term fundamentals and more on short-term price action, it aligns with our broader market thesis that risk assets have not bottomed out as shown. in our July monthly report. Macro reigns supreme right now, and given bitcoin’s still nascent place as a mere pond in the middle of a global ocean of total assets, realized correlations and relative underperformance are respectively expected and remarkable.

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