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Bitcoin shows signs of lesser correlation with the stock market
Bitcoin’s correlation with the stock market may finally dissolve at the end of 2022. The major cryptocurrency is experiencing less volatility these days compared to fluctuations in the stock market.
For most of the year, bitcoin had to battle the same downward pressure that affected both stock and bond markets. As central banks around the world seek to tighten monetary policy in order to keep inflation under control, this is producing a heavy dose of downside volatility that is keeping investors on the sidelines when it comes to traditional assets.
This same pressure has also affected bitcoin, which is ideally an uncorrelated asset when juxtaposed against traditional financial markets. However, as markets look to rally in the fourth quarter, bitcoin has remained relatively quiet by comparison.
Crypto markets continue their slumber with little progress in either direction, said Richard Usher, head of OTC transactions at BCB Group. Until general risk rebounds, this sector will not.
Heading into the last quarter, bitcoin broke above the $20,000 level amid a market rally, but has been falling below and above the $19,000 price level lately. As the stock market rallied, the major cryptocurrency reestablished its non-correlation with stocks.
The price of bitcoin is holding at the $19,000 level, but with FOMC minutes and CPI coming this week, the market is likely to refrain from taking risks, which will likely put pressure on bitcoin, a said Yuya Hasegawa, crypto market analyst at Japanese crypto. bitban exchange.
More institutional adoption
Would-be bitcoin investors looking for a sign of optimism may look to more institutional adoption as traditional market players look to add more digital currencies amid the 2022 crisis. Now could be the time opportune for these large investors to inject large doses of capital into cryptocurrencies while prices are still depressed.
These big companies believe in the potential of digital assets and Web3, said Owen Lau, analyst at Oppenheimer. It takes time to build, but these companies are taking a long-term view to build capacity to ensure they won’t fall behind in 3-5 years.
The latest price drops in 2022 may make bitcoin investments more skeptical. However, there is an alternative solution through Bitcoin futures.
Investors who want exposure to bitcoin while avoiding investing through a cryptocurrency exchange can opt for the ProShares Bitcoin ETF (BITO). The fund provides exposure to bitcoin futures, tracking the price movements of the major cryptocurrency in a normal market.
Additionally, the fund is actively managed, giving investors the peace of mind of knowing that their investment is in the hands of experienced portfolio managers. Bitcoin can be a volatile asset and active management can make portfolio changes on the fly when market conditions warrant adjustment.
BITO has also kept in step with bitcoin prices so investors need not worry if the fund deviates from cryptocurrency price movements. BITO offers this tactical exposure while remaining within the regulatory framework of the traditional financial market, which reinforces its potential security.
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