Bitcoin's Correlation with Bonds Hits a Minimum: What's Behind It and Its Impact on Crypto and Bond Markets
Date: 2023-10-07 Author: Dima Zakharov Categories: CRYPTO PAYMENTS, IN WORLD
Bitcoin's Changing Correlation with Long-Term Bonds
In recent weeks, a remarkable phenomenon has been observed in the markets: the correlation between Bitcoin and long-term bonds has dropped to its lowest point in the past year. This unusual trend reflects the complex interaction between digital assets and traditional bond investments. Last year, as interest rates rose, both the value of long-term bonds and Bitcoin declined. During this period, investors preferred to avoid risky digital assets.
Changing Perception of Bitcoin as a Store of Value
However, the reason for the decrease in correlation may be more profound. Bitcoin is now perceived not only as a means of exchange but also as a store of value. This is reflected in the Network Value to Transactions (NVT) ratio of BTC, which has reached a record high. The growth of this ratio suggests that the value of Bitcoin is no longer as closely tied to its transactional utility. The market has changed its attitude toward this cryptocurrency.
Price Dynamics of Bitcoin and Bonds
Over the last 30 days, the price of Bitcoin has risen by 7%, while the value of ETFs for long-term Treasury bonds has decreased by 10%. This serves as a vivid example of the changing dynamics in the market. The price of Bitcoin continues to trade in a narrow range, but indicators indicate that the buying power outweighs selling pressure.
Rising Market Capitalization of Bitcoin and Dominance
Bitcoin's market capitalization continues to grow and currently stands at $546 billion. Its dominance in the cryptocurrency market is also increasing and has reached 49.8%, the highest level in several weeks. These changes indicate a gradual evolution of the cryptocurrency market and a shift in investor attitudes toward these assets.
Total Market Capitalization of Cryptocurrencies
In summary, the growth in Bitcoin's market capitalization and the changing correlation with bonds point to interesting trends in financial markets. The total market capitalization of cryptocurrencies has also increased by $10 billion and is approaching the $1.1 trillion mark. All of this underscores the importance of monitoring the dynamics of both digital and traditional assets in today's financial world.
These changes and trends reflect the complex interaction between different types of assets and evolving investor preferences. It also highlights that the cryptocurrency market is becoming an increasingly important element of the global financial system, deserving attention and analysis.
