Bitcoin has been facing some challenges lately, with its price dropping by more than 20% since reaching a record high in mid-March. On the other hand, U.S. stocks, such as the Nasdaq Composite and the S&P 500, have been consistently rising, closing in the green for the seventh day in a row and hitting all-time highs.
According to a report by The Block, the correlation between bitcoin and these stock market indices had decreased to multi-month lows, indicating that they were moving in opposite directions. However, today, they are moving in sync as all of them are experiencing a decline.
At midday in New York, the Nasdaq is down by 1.8%, the S&P 500 by 0.9%, and bitcoin by 0.6% to $57,500. This downward trend in the stock market could potentially lead to further losses in the cryptocurrency market, according to market strategist Joel Kruger from the LMAX Group.
Kruger mentioned that the biggest risk for crypto assets at the moment is the possibility of a sharp pullback in the highly overbought U.S. equities market. While the correlation between stocks and cryptocurrencies is not absolute, there is evidence to suggest that a significant decline in stocks could have a temporary negative impact on crypto prices.
In conclusion, the recent recoupling of bitcoin and stocks has frustrated crypto bulls as prices continue to decline. The evolving relationship between these two asset classes will be something to closely monitor in the coming days to see how it may impact the overall market dynamics.