Bitcoin’s (BTC) fortune is no longer tied to sentiment in the U.S. stock markets, according to data tracked by crypto derivatives analytics firm BlockScholes. The 90-day rolling correlation of changes in bitcoin’s spot price to changes in Wall Street’s tech-heavy equity index, Nasdaq, and the broader index, S&P 500, has declined to near zero – the lowest in 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, said Andrew Melville, research analyst at BlockScholes. The fall in correlation has happened as both assets have retraced losses sustained throughout last year’s tightening cycle.
The dwindling correlation with traditional risk assets means that crypto traders focusing solely on traditional market sentiment and macroeconomic developments may face disappointment. Recent spot bitcoin exchange-traded fund (ETF) filings by BlackRock (BLK), Fidelity, WisdomTree (WT), VanEck, Invesco (IVZ) and others have brought optimism to the crypto market, with bitcoin producing a return of 25% since BlackRock’s filing on June 15.
Per Ilan Solot, co-head of digital assets at Marex Solutions, the ETF narrative can be broken down into three parts – frontrunning the launch, flows post-the-spot ETFs go live and validation of crypto as an asset class. Investor interest in exchange-traded products has increased since June 15, with globally BTC ETPs experiencing inflows of 13,822 BTC in June.
The flows have been strong across jurisdictions, with Canadian and European spot ETPs and U.S. futures ETFs all experiencing solid inflows, said Vetle Lunde, senior research analyst at K33. While the ETF narrative is currently in the driver’s seat, some macroeconomic factors, like potential fiat liquidity pressures, still warrant attention, analysts told journalists. Bitcoin changed hands at $30,830 at press time, per market data.