Bitcoin (BTC) is increasingly dependent on macroeconomic conditions – Grayscale
Date: 2023-07-23 Author: Karina Ziganova Categories: BLOCKCHAIN
Analysts at the American investment firm believe that the latest growth of bitcoin directly depended on the macroeconomic situation
The 80% increase in the price of Bitcoin (BTC) from December 2022 to July 2023 was the result of either macroeconomic conditions or features specific to cryptocurrency. This was announced in a blog post by Grayscale analysts.
According to analysts, the correlation of bitcoin with other market variables began to increase simultaneously with the coronavirus pandemic. Prior to this, BTC was weakly correlated with the traditional financial market.
For example, Bitcoin's correlation with the S&P 500 index has not been consistently positive or negative. However, since 2020, the correlation of BTC with the index has become clearly positive, according to Grayscale. In October 2022, it reached its maximum, but since then it has begun to fall rapidly.
Bitcoin has also begun to show signs of correlation with technology stocks. With precious metals like gold, cryptocurrency is still correlated, but moderately, according to the investment firm.
However, Grayscale admits that the formation of the bitcoin exchange rate could also be influenced by features that are characteristic only of the cryptocurrency itself. These in Grayscale include optimism about the possible approval of a spot bitcoin ETF in the United States, as well as the stability of bitcoin despite the banking crisis in March.
Grayscale admits that the rally of bitcoin and other cryptocurrencies may continue until the end of 2023. However, this is only possible if inflation in the US stops rising and the Fed does not raise interest rates. If inflation figures turn out to be worse than predicted, then the Fed's policy may hinder the growth of bitcoin and other risky assets, Grayscale believes.
