Bitcoin’s Price Recovery After Recent Downturn
Over the past week, Bitcoin has experienced a mixed-price performance. Initially, it fell below $40,000 for the first time since December 2023, but it has since shown signs of recovery. The cryptocurrency reached above $41,000 and even briefly touched $42,000 on Friday, January 26. Interestingly, recent data suggests that Bitcoin may be following the footsteps of the S&P 500 stock market index, which recently achieved a new all-time high.
BTC Trying to Regain Correlation with S&P 500
In a new post on the X platform, data analytics site Santiment has highlighted Bitcoin’s potential attempt to regain its correlation with the S&P 500. The S&P 500 is a popular stock market index that tracks the performance of 500 of the largest exchange-listed companies in the US.
Santiment’s on-chain analytics platform reveals that investor sentiment around Bitcoin peaked on January 11 after the approval of 11 spot BTC exchange-traded funds in the US. This development caused significant downward pressure and a substantial decline in Bitcoin’s price.
Meanwhile, the S&P 500 has been performing strongly in recent weeks and deviating from its correlation with Bitcoin. Santiment’s report shows that the stock market index reached a new all-time high on Thursday, January 25.
Considering Bitcoin’s recent resurgence, Santiment suggests that Bitcoin and other large-cap assets might “regress to the mean and play catch-up with the equities markets.” This implies that cryptocurrencies may realign with the performance of traditional equities.
The Relationship Between Stock Market and Cryptocurrencies
For many investors, the relationship between the stock market and cryptocurrencies has been intriguing. A weak correlation between these two asset classes often provides diversification opportunities for investors.
Bitcoin’s Current Price and Market Capitalization
As of now, Bitcoin is priced at $41,824, reflecting an almost 5% increase in the past 24 hours. Although it is still some distance away from its 2024 high of around $49,000, the recent upswing has helped Bitcoin recover most of its losses from the past week.
According to CoinGecko data, Bitcoin has only increased by 0.5% in the last seven days. Nevertheless, it remains the largest asset in the cryptocurrency sector with a market capitalization exceeding $820 billion.
Hot Take: Bitcoin’s Potential Correlation with Stock Market
Bitcoin’s recent price recovery after a period of decline suggests that it may be trying to regain its correlation with the stock market, particularly the S&P 500 index. Santiment’s analysis highlights this possibility and indicates that Bitcoin and other large-cap assets could align with traditional equities in the future. This relationship between cryptocurrencies and the stock market has been intriguing for investors as it offers potential diversification opportunities. Despite not reaching its previous high, Bitcoin’s recent upswing has helped it recover from losses. With its position as the largest asset in the cryptocurrency sector, Bitcoin’s performance remains a key focus for many market participants.
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