The cryptocurrency market’s detachment from the Nasdaq 100 stock index is gaining momentum following the recent collapse of Terra’s LUNA token. With Bitcoin (BTC) still struggling with the $30,000 level, the US stock market is rebounding from this year’s lows and back above the 20-day moving average.
- The Nasdaq 100 closed last week in the black, halting a seven-week streak of declines
- Bitcoin, on the other hand, was losing 9 weeks in a row, hitting a new shameful high
- The Nasdaq 100 Disconnect with Bitcoin Became Evident After the Terra Network Ecosystem Collapsed
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Bitcoin vs. Nasdaq 100. The correlation has started to fade
Prior to the sudden collapse of the once-popular Terra ecosystem, cryptocurrency prices moved in line with the Nasdaq 100 and the broader Wall Street market. Bitcoin’s price fell around 2.4% on May 28, according to data from CoinMarketCap. This was at odds with the overnight rebound in major Wall Street indexes. The S&P 500 index gained 2.47% last Friday, and the Nasdaq 100 meanwhile gained 3.33%.
The separation between Bitcoin and US stock indices was not so clear before the Luna crash. So far, cryptocurrency investors have paid close attention to the Nasdaq’s highs and lows this year, investing in bitcoin and altcoins as their price movements have coupled with each other against the backlash. growing concern over risky assets as the US begins to tighten monetary policy.
In April, we wrote that the correlation between these two instruments was at record highs. The recent disconnect was largely due to deteriorating investor sentiment in the cryptocurrency market following the unexpected collapse of Terra and the Luna cryptocurrency in the first part of May.
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Even though cryptocurrencies and US equities are generally classified as risky assets in times of global monetary tightening, the former have continued their losing streak in recent weeks, with investor sentiment at its peak, unlike US equities which rebounded last week thanks to the rally in technical prices. companies.
– Nasdaq traffic has been a key indicator of when cryptocurrency investors are buying or selling their assets, as these two markets have followed a similar pattern until recently. But it seems that is not the case for now as more and more investors identify cryptocurrency assets as riskier than US stocks. – commented an analyst from the Korea Times.
It remains unclear whether the cryptocurrency market will be able to rebound in the near future, as the United States and major economies around the world are on track to raise their benchmark rates. The Federal Reserve has already raised its key rates and says it will do so several more times before the end of this year.
Additionally, initial investor reaction to Terra Luna 2.0 remains skeptical, and the price of the new LUNA is showing extreme volatility after its debut last weekend. Data from CoinMarketCap shows that the price of LUNA 2.0 started trading around $20, but fell very quickly and is currently trading at around $6.5.
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