In the past few months, Bitcoin (BTC/USD) has risen almost in sync with U.S. technology stocks, but due to oversupply and insufficient demand, the correlation between Bitcoin and U.S. technology stocks is weakening. Manuel Villegas, an analyst at Julius Baer Next Generation Research, said: "Excess token supply is expected to enter centralized exchanges in the next few days, which may put pressure on Bitcoin prices. Excess supply has always been a major factor affecting confidence."
The latest data shows that the 90-day correlation coefficient between Bitcoin and the Nasdaq index has fallen to 0.21. The coefficient has fallen by more than 50% in two months. As of October 10, the price of Bitcoin has fallen by 14.83% from its high point in July, while the overall change of the Nasdaq index is almost zero or even increased. From the figure, it can be seen that BTC has not been able to rise with the rise of US stocks, but when the US stocks fall, BTC often falls with them.
Data source: AICoin
Data source: Eastmoney.com
In the past, Bitcoin was considered "digital gold" or a safe-haven asset, and investors would seek to hedge against traditional market risks, but its high volatility often caused it to decline synchronously when economic uncertainty increased. Recently, the Chinese stock market has shown signs of recovery. This is mainly due to China's introduction of a series of favorable policies and the low price of assets, which attracted many foreign investors.
Well-known institution Goldman Sachs believes that although the Chinese stock market has rebounded strongly, there is still potential for further growth: Chinese assets are estimated to rise by 15% to 20%. The strong performance of the Chinese stock market has attracted funds that were originally invested in the cryptocurrency market. This capital transfer may be temporary, but it explains part of why Bitcoin has not followed the upward trend of the US stock market.
At the same time, the cryptocurrency market remains sluggish. Different countries have different levels of regulation on Bitcoin. The United States has relatively loose regulation on Bitcoin, while China has adopted a strict prohibitive attitude towards Bitcoin, including banning initial coin offerings (ICOs) and the operation of cryptocurrency exchanges, as well as a comprehensive ban on cryptocurrency trading and mining activities. This has greatly restricted the ability of foreign capital to develop money-making effects through Bitcoin trading in China.
