After several months of free fall, it jumped more than 17% in July, the best performance since October. Ether is up 57%, its biggest monthly gain since January 2021.
The rally was in line with the rise in riskier assets such as equities, and investors were betting that economic weakness could dissuade the Fed from aggressively tightening monetary policy.
Bitcoin’s 40-day correlation with the technology-focused Nasdaq is now 0.90 – up from 0.41 in January – where 1 means their prices move in perfect sync.
The major cryptocurrency has had a consistent positive correlation with the Nasdaq since the end of November, as opposed to previous years when it was consistently negative, meaning they have been moving in opposite directions.
Itay Avnery, deputy CEO of cryptocurrency trading platform INX, called the July convergence “good news.”
“This means that institutional investors view bitcoin like any other asset,” he said. “When the market turns around—and it will—these institutions will come back and invest in crypto.”
Profits were not limited to bitcoin, according to data from CoinGecko, as the value of the global cryptocurrency market topped $1.15 trillion last month, adding more than $255 billion since the end of June.
Assets under management in digital asset investment products rose 16.9% to $25.9 billion in July, reversing a 36.8% decline seen in June, according to research firm CryptoCompare.
However, trading has been sluggish, indicating that many investors believe it is too soon to go bullish in a highly uncertain macro environment, with runaway inflation, America and Europe on the brink of recession, not to mention the collapse of some major crypto players. .
Average daily volumes across all digital asset investment products fell 44.6% to $122 million, the lowest since September 2020, according to CryptoCompare.
“In the medium term, we are bearish (in crypto) despite the current rally, this is consistent with our stance on equities,” MacroHive researchers wrote on Friday, citing inflation, recession risks and rate hikes.
Bitcoin correlation with Nasdaq:
FROM 60 000 dollars.
Bitcoin is currently trading at $23,336, consolidating around the $24,000 mark after touching that level last week.
It is likely to continue trading in a tight range around $20,000 give or take 10-15% until the economic trajectory becomes clearer, according to Chris Terry, vice president of lending platform SmartFi.
“We could stay in this locked market for weeks.”
On the other hand, if the United States enters a protracted recession and the Fed is forced to cut interest rates, bitcoin could benefit, said Russell Starr, CEO of Valour, which creates exchange products for digital assets.
“It will take another quarter of a recession before we see a recovery to the $60,000 high,” he said.
For investors who plunged into crypto during its surge at the peak of loose monetary policy in the pandemic era, the next few months could be pretty bumpy, according to Adrian Kenny, senior commercial trader at GlobalBlock.
“There may still be a significant mountain to climb in terms of ‘normality’ or hope for a return to the 2021 peaks soon.