Bitcoin Price and Tech stocks’ Correlation is a Deciding factor for Crypto Market's Decline Says Chainalysis
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Following the release of the Consumer Price Index (CPI) data on Friday, the 10th of June, the reaction to the news was more of negative than positive.
Negatively, the crypto market nose dived, affecting noobs who were always optimistic about the market. And positively, for long term players who see opportunity of buying the dips. It's also a positive one for swing traders who now have better positions of entry.
The Consumer Price Index (CPI) according to reports released by the Bureau of Labour Statistics (BLS) on Friday revealed an increase of 8.6%. The highest it has been since December 1981.
This also contributed to the fall of Bitcoin, Ethereum and altcoins in general.
Although, the reason why the crypto market is at its knees is as a result of a cumulative factors. One of such is the failure of Terra UST.
Talking of the failure of UST, an algorithmic stablecoin experiment of the Terra Labs, founded by Do Kwon has been debated as the major cause of the crypto market decline.
A report from Chainalysis, a blockchain research and investigative company has negated such fact.
In its report that surfaced online on Friday, the 10th of June, it is of the view that the downturn of the crypto market was and is majorly due to its correlation with the tech stocks. And since there is a decline in tech stocks, the crypto market followed suit because of the correlation.
Quoting them, “the crypto market’s recent downturn appears more closely linked to the tech market decline than to UST’s collapse.”
https://twitter.com/chainalysis/status/1534996267985960960?t=FppHCEncQVJTAIGYmYZiJA&s=19
It is a new trend that Bitcoin is correlated to tech stocks. Bitcoin now maintains significant price correlations with the NASDAQ-100 Technology Sector Index and the S&P 500 Index. Meaning that when they rise, it will rise in value too and vice versa when they fall.
Talking of Do Kwon's UST, it has been revealed by the SEC that he benefited $2.7 billion according to a twitter user
https://twitter.com/FatManTerra/status/1535623665013891078?t=23pfeSe-TKRlQS2MKbk9aw&s=19
There are no doubts that the UST and Terra Luna's black swan drastically impacted the crypto market but report according to chainalysis suggests that the correlation of the teck stock market to the crypto market is a major deciding factor for why prices of Bitcoin, Ethereum and altcoins continue to tank in 2022.
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