Bitcoin Struggles Below $40K as Traders Digest Fed Statement
June 18, 2021 @ 09:42 +03:00
Bitcoin traded lower as investors unpacked Wednesday’s announcement from the U.S. Federal Reserve that it could raise interest rates by late 2023. Assets deemed to be risky like stocks and crypto also appear to be weighed down by lingering concerns that the Fed may wind down its bond-buying program sooner than expected. Some analysts, however, expect bitcoin to remain resilient if inflation continues to rise, which could lead to outperformance versus traditional markets. In a newsletter published on Wednesday, EQUOS, a digital asset financial services company, described the initial down move across risk assets as a “knee-jerk reaction.”
“Bitcoin and stocks will likely correlate through the turbulence, before reality hits: Inflation is likely to see bitcoin outperform stocks,” EQUOS wrote. The chart shows the 90-day correlation between bitcoin and the S&P 500 has risen so far this year.
Since May, the cost to fund long positions in the market for bitcoin perpetual swaps, a type of derivative in the cryptocurrency markets similar to futures contracts in traditional markets, has been in negative territory. Such a scenario sometimes precedes spot price recoveries. Entities holding less than one bitcoin own almost 5% of the total supply distribution, according to data from Glassnode. That suggests an increasing presence of smaller players in the bitcoin market.
Market Wrap: Bitcoin Struggles Below $40K as Traders Digest Fed Statement, CoinDesk, Jun 18