Even though BTC trading occurs round the clock, it usually makes its best bullish moves during weekends. Also, during weekends, it rarely makes any unusual moves during the US stock market operating hours on weekdays.
BIG’s Observations About BTC Price Movement
However, Bespoke Investment Group (BIG) data suggests BTC’s volatility is often different within the same period on weekdays. Also, the price action of the leading digital asset is often quiet on any weekday before the stock market opens.
However, BTC starts averaging dips of about 1.5% during the stock market’s open periods. BIG further claimed that BTC starts trading sideways for some hours after the US stock market period closes.
Then, it starts an uptrend between 8 pm and midnight. One BIG’s top analysts noted that “nearly all of BTC’s dips in the last 30 days have been during periods when the US market is open.”
He further said, “thus, we can predict that the recent BTC dips are its response to intense selling from investors willing to convert their assets to fiat. It is not that the digital asset is moving along a particular trend.”
Various analysts have made similar conclusions. Since the start of this year, price movements in the crypto and stock market have been relatively similar. Whenever the stock market is bullish, the crypto market is also bullish. The reverse also happens.
Moving Together Like A Chain
Analysts have observed strong similarities between the price action of stocks and BTC. However, the price movement similarities have been stronger between BTC and tech stocks. Hence, some analysts regard both markets as high-risk markets where investors need to be extra cautious.
According to Bloomberg data, the 90-day correlation index between BTC and tech stocks is now more than 0.68. It is the first time in more than a decade that this index has risen to such levels.
An index of one indicates that the assets are moving together like a chain. However, an index of minus one suggests that they are moving across each other. All high-risk assets have been struggling since the start of this year. Their struggles have risen higher following the Fed’s announcement to increase the interest rate.
The Fed’s Actions And Market Trend
The Fed lowered the interest rate since the heat of the pandemic in 2020 to enable businesses to continue operating, thus preventing the US economy from a collapse.
However, the Fed announced increasing interest rates because of the rising inflation rate. The rise in inflation rates has had a huge negative impact on businesses and high-risk assets.
BIG also noted that BTC’s large dips during the US stock market open periods directly affect the risk-off bias in the US stock market. The investment firm further remarked that the stock market seems to be driving the cab trend, while BTC remains an unwilling passenger.