Will Crypto Prices Ever Be Able to Decouple from Stocks?
Cryptocurrencies and stocks have been making headlines for quite some time. Everyone is wondering whether cryptocurrencies and stocks can coexist in the future. Can cryptocurrency prices decouple from stock prices?
These are difficult questions to answer due to a lack of knowledge about cryptocurrencies and their future. However, some similarities between the two markets may provide insight into what may occur in the future.
A decoupled market is an economic system that is not dependent on stock market performance. The decoupled market exists alongside the stock market but does not rely on the latter's performance to function. This could be considered a form of economic independence.
There is a close relationship between the price of Bitcoin (BTC) and the value of equities, specifically the value of technology stocks. On a daily timeframe, the correlation between Bitcoin, the leading cryptocurrency by market capitalization, and the S&P 500, which features a heavy tech component, had reached a value of 0.69.
The correlation value is calculated using a method that considers the changes in the index and the cryptocurrency's price over time. In general, correlations above 0.5 are considered very high, and those above 0.7 are considered extremely strong. On the other hand, those between -0.3 and 0.3 are considered weak.
A score of 1 implies perfect synchrony, while -1 represents complete opposition.
The release of Consumer Price Index data impacted the cryptocurrency and stock markets. The rate of consumer price inflation in the United States has slowed in recent months. It did, however, remain close to a four-decade high.
However, the release of US CPI figures triggered a dramatic sell-off in the stock market, and the crypto
Read more on cryptonews.com
