Why Bitcoin Investors Should Pay Attention To The Macro Environment
04 Août 2022 - 01:00AM
NEWSBTC
It can no longer be denied that the price of bitcoin is being
heavily influenced by the macro environment. The stock market
correlation had hit a new all-time high earlier in the year, and
the crypto market is yet to decouple from it. Given this, bitcoin
investors would do well to react accordingly and pay attention to
the stock market for a possible forecast of where the bitcoin price
may be headed, and here are some reasons why. Institutional
Investors Are Here The call for institutional adoption had been
loud throughout the last few years, and these big players had
actually begun to move into the market. While this had come with a
lot of positives for bitcoin, such as increased demand, it had also
inadvertently tied bitcoin’s price to the stock market, which these
big players are very visible. The result of this had been a
stronger correlation of bitcoin to the trends happening in the
stock market. This means that whatever affected the institutional
investors in the stock market due to the financial situations had
also flowed over into bitcoin. Hence, if the stock market was going
down, bitcoin is now more likely to follow it. And what’s more is
that bitcoin actually does this with more volatility, causing a
larger swing in price compared to the stocks. Correlation with
stock market remains high | Source: Arcane Research So if
institutional investors are forced to sell their stocks, as was
recently seen, it also flows into bitcoin. Hence, when there is
forced selling in the stock market, there is also forced selling in
crypto. So a decline in the stock market means a decline in bitcoin
price. Rising Interest Rates Affect Bitcoin 2022 has put the
financial markets through a lot of hurt, and it has gotten worse
with the level of inflation being recorded. The Fed has had to come
up with new ways to combat this, which has led to a dramatic rise
in interest rates. BTC trading at $23,516 | Source: BTCUSD on
TradingView.com These rising interest rates have been one of the
major reasons behind bitcoin’s decline. Recall that the decline in
the crypto market had actually started when some big players in the
space had failed, but it was further pushed forward when the Fed
announced the March interest rate hike that moved the fund’s rate
from 0% to 2.25%-2.5%. This is why paying attention to the macro
environment is important to try to predict the future of bitcoin.
Given its present correlation with the stock market and how the
price had reacted to the hike in interest rates, staying abreast of
the movements in the stock market as well as how the Fed is
handling interest rates puts an investor in a position to make the
best-informed decision. Featured image from GOBankingRates, charts
from Arcane Reseach and TradingView.com Follow Best Owie on Twitter
for market insights, updates, and the occasional funny tweet…
TRON (COIN:TRXUSD)
Graphique Historique de l'Action
De Fév 2024 à Mar 2024
TRON (COIN:TRXUSD)
Graphique Historique de l'Action
De Mar 2023 à Mar 2024