The crypto market had been trying to recover from its crash earlier this month, and on Monday May 30th it finally saw some progress. After nine straight weeks of red for Bitcoin (the cryptocurrency), a rare comeback occurred as well..
Juan Pellicer, a research analyst from Into the Block thinks that this sudden rise in prices can be attributed to Wall Street’s recovery.
“I think the recent BTC price action is very influenced by the US market’s bounce,” said Pellicer. “SP so far is bouncing almost 10% from the lows of last week, so there might be part of the market believing that after the last sharp correlation, we are in for a fast recovery.”
The correlation between cryptocurrency and stock market had decoupled last week when S&P recorded gains of 6.94% while Bitcoin closed the week at 8.9%. Compared to traditional markets, the crypto industry runs nonstop benefiting bitcoin as it climbed 3% over the weekend but on Monday morning after opening prices were not only up along with recovery in stocks.
Bitcoin has been trading in correlation with big tech stocks as global markets softened for some time. However, it seems that crypto traders are ready to recover from the bloodbath their assets have suffered over recent months- at least according to Pellicer. With Bitcoin down 50% from its high and many Altcoins experiencing 70% losses, a recovery is bound soon enough once again .
More and more people are realizing the importance of cryptocurrencies in today’s modern world. Cryptocurrencies were originally created as an independent asset class, but they’ve traded more like tech stocks over time due to their volatility on markets around the globe (for example: Terra). However when news broke about Ethereum possibly merging with another blockchain network, it added to broader global economic concerns.
The Ukraine war, rising inflation and food shortages are just some factors that have added negative sentiment towards crypto investing. In addition to these problems is America’s increasing strength as a currency which means most cryptocurrencies will be valued against the dollar using stablecoins such USDT or BUSD. As the dollar weakens, the value of cryptocurrencies will grow.