Correlation between cryptocurrencies and the US stock market approaches an all-time high

The indicator was 0,67 with a maximum possible 1

23.09.2024 - 15:45

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What’s new? The correlation between cryptocurrencies and the US stock market approached a record value after the Fed cut its key rate. Thus, according to Bloomberg data, the 40-day correlation coefficient between the 100 largest cryptocurrencies and the S&P 500 index is about 0,67. The higher mark (0,72) was reached only once, in the second quarter of 2022.

Material by Bloomberg

What else is known? A value of “1” indicates that assets are moving uniformly, while “-1” signals a divergent movement of the cryptocurrency and equity markets.

A high direct correlation also signals that macroeconomic factors are significantly affecting cryptocurrency rates. At the moment, traders are tracking further actions of the US central bank.

For example, US stock indices reached all-time highs and bitcoin rose above $64 000 after the Federal Reserve began its expected monetary easing cycle last week, cutting rates by 50 basis points.

US economic data is now crucial for traders in both markets, as it provides insight into the possible scope and pace of further reductions in the underlying cost of credit.

This week’s focus will be on comments from Fed officials, as well as the release of the Personal Consumption Expenditures (PCE) index.

In addition, the positive momentum in the crypto market was supported by Vice President Kamala Harris’ announcement that if she wins the presidential election, she will promote increased investment in AI technology and the cryptocurrency sector.

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