Bitcoin experienced a severe crash last week alongside the stock market which was responding to the COVID-19 pandemic that has led to record crashes in stock prices. The crash in BTC price suggested its correlation with the stock market although some have argued that this is not the case. The number one cryptocurrency was on recovery and rose above $6,000, but the recovery has stalled lately.
In case you wonder why this is happening, it’s because BTC is still correlated with the stock market. This is the position of cryptocurrency analyst and trader, Josh Rager. In a tweet, he said no true decoupling has happened and so BTC’s price movements are expected to rhyme with the stock market until something new happens.
The stock market has been down in the last two weeks, causing most of the stocks to see their worst losses in over 30 years. Since then, the market has not recovered and it is uncertain when the recovery will come as the COVID-19 pandemic seems to be spreading to more countries as more cases are recorded daily. Going by Rager’s opinion, BTC’s recovery is also uncertain as it will only come out of the crash when the stock market does.
The correlation between the two has been between 0.5 and 0.6 since the market crash on March 12. Measured on a scale of -1 to +1, this suggests that BTC has a significantly strong correlation with the stock market since the crash. While there is a great expectation for BTC’s price to surge especially in the coming days, there are doubts about the possibility of this.
The BTC halving is due to happen in May 2020 and a positive price movement is one of the indications of this event. Halving has historically been a major price push for the number one cryptocurrency and 2020 is not expected to be different.
However, with BTC’s dependence on the stock market, will this be the case? If the pandemic lingers and the stock market does not recover on time, will the halving have the kind of effect it is expected to have? Meanwhile, at the time of reporting, BTC has dipped below $6,000 and all top ten cryptocurrencies are in the red along with it.