The correlation between Bitcoin and Nasdaq reaches a two-year high, as mixed US inflation data obscures the Fed’s path
The correlation between Bitcoin and Nasdaq reached a two-year high, as the release of US inflation data boosted the performance of the digital asset.
Bitcoin US technology stocks now have a 30-day correlation coefficient of 0.70.
Cryptocurrency and stock markets rose after the inflation report was released
The Bureau of Labor Statistics released its inflation report on Wednesday. Since then, stock prices and cryptocurrencies have made many gains. Following the inflation report, S&P 500 and Nasdaq futures rose more than 1%, while Bitcoin rose more than 2.6%.
The report showed that the consumer price index rose by 0.4% on a monthly basis, bringing the annual inflation rate to 2.9%, which is in line with economists’ expectations. According to the Dow Jones Index, most economists expected that the inflation rate would fall in a range of 0.3% to 2.9%.
Moreover, the annual rate of core CPI was 3.2%, slightly better than expectations of 3.3%. In addition, the headline CPI inflation rate has been rising for the past three consecutive months; However, core inflation was waning, which is what Al Qubaisi’s message did describes your “The situation is mixed for the Fed.”
However, cryptocurrency markets and technology stocks are still awaiting the Fed’s announcement regarding possible further interest rate cuts at the next FOMC meeting. Given the country’s high inflation rate, the Fed had earlier hinted that current interest rates may stay in place for a little longer.
Currently, Bitcoin stocks and US technology stocks are highly correlated with a coefficient of 0.70.
Analysts believe that Trump’s inauguration may have an impact on cryptocurrency prices
As President-elect Trump waits to be sworn in on January 20, some analysts believe his inauguration could drum up another bullish momentum for cryptocurrencies.
K33 research analysts Vetel Lund and David Zimmerman note:
The overall sensitivity to interest rates over the past month indicates an increased importance of Wednesday’s CPI reading. Additionally, Trump’s notable momentum may continue to build in the days leading up to the inauguration.
– K33 Research Analysts
However, hedging activity is on the rise, indicating that cryptocurrency investors expect increased volatility in the coming days. Sean Dawson, head of research at Derive.xyz, commented on the growing share of bearish bets, saying that investors are preparing for a possible price decline ahead of the inauguration.
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