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Bitcoin price attempted to move away from the $32,954 support level, but the price continuously corrected back to this level. This pattern has been visible since the decline in May, and despite the price breaching support at this level, BTC has managed to recover to just above $32,954. At the time of publication, BTC was worth $33,034 and was down 5.44 percent in two days.
As a result of this recurring pattern, Bitcoin lost correlation with the S&P 500 Index and entered the negative zone.
For the first time in 2021, Bitcoin’s correlation with the largest equity index flipped negative. Data collated from Kaiko noted that for the first half of 2021, Bitcoin and the S&P 500 were loosely correlated as both repeatedly broke all-time highs amid the bull run.
However, Bitcoin’s price has dropped roughly 45 percent in the previous two months, while the S&P 500 closed at a record high of 4384 on Monday. Including the latest loss, BTC had a year-to-date return of 10.27 percent, while the S&P 500 had a year-to-date return of 18.48 percent. As a result, the two have a significant divergence.
The decreasing connection also applied to Bitcoin and Gold. The correlation of the digital asset sank to the negative zone in March 2021 and has since slid deeper into the negative zone, until recently when it reversed from -0.4. According to the chart above, the S&P 500-Bitcoin correlation was crossing over the Bitcoin-Gold correlation, indicating that the largest cryptocurrency may take its own route when it recovers.
Bitcoin’s average 6-month trading returns have become negative as it has lost touch with traditional assets. This was highlighted by the data provided by the Santimnet team, which noted that BTC was undervalued at the current price level.
According to the experts, historical evidence indicated that now was the moment for long-term holders [LTH] to make a move. The digital asset’s low value has been viewed as an appealing entry opportunity for traders looking to buy a substantial quantity, and with the price being range-bound, BTC investors may add to the purchasing pressure and aid the coin’s recovery.