Bitcoin (BTC) hasn’t closed over $25,000 in 111 days–leading many investors to believe BTC has found a new rock bottom. It doesn’t help that the global financial market is wary already, primarily due to the Nord Stream gas pipeline matter this week, increasing the already rising tensions in Ukraine.
The Bitcoin Struggle
The world’s largest cryptocurrency, BTC reached $20,000 Tuesday, its highest level in over a week. Despite this, Bitcoin still struggles to free itself from its stiff trading range.
One could say the struggle has been real. Since mid-June, BTC has been trading between $18,000 and $25,000. A crash that confiscated close to $2 trillion from the crypto market after peaking in November doesn’t help.
The correlation this year between digital currencies and the U.S. stock market has kept crypto investors watching closely. Nasdaq and the S&P 500 have been under pressure due to higher interest rates–the latter being on track for a consecutive third negative quarter.
Due to “weaker consumer demand,” Apple decided to decrease iPhone production, resulting in Bank of America analysts downgrading the tech company to neutral. Additionally, the real estate market has shown signs of reversion after a 77% decrease in housing prices, according to Fortune.
S&P 500, Crypto Correlation Weakening
There are signs that the historical correlation between the stock market and crypto could be losing its strength. The BTC rally that began on Monday happened despite the S&P 500 closing at its lowest level of 2022. Crypto investors are still watching the U.S. dollar closely, however, as it moves inversely to Bitcoin.
$20k Rally Doesn’t Excite Traders
Despite the recent surge for Bitcoin, investors aren’t exactly stoked.
BTC futures premium has remained below 2% over the past 30 days. What does this mean? Well, the three-month futures premium should trade at +4% to +8%, to cover costs associated with risks.
Similar to the failed attempt at $20,000 on Sept. 27, Bitcoin rallied 21% between Sept. 7 and Sept. 13. Despite this, the metrics did not improve.
One thing is certain: the metrics suggest that the crash on Sept. 27 was to be expected–explaining the low impact on liquidations. $22 million of futures contracts were liquidated by force, despite the 9.2% correction from $20,300 to $18,500.
But there’s a plus side.
The 111-day drought was not enough to instill bearishness in BTC investors. Additionally, the futures premium stands close to zero, meaning bears still have some gas in the tank.
