Bitcoin (BTC) price is still trading at a relative loss. Therefore, it does not affect market makers today. However, the cryptocurrency doesn’t seem to be acting alone, as Bloomberg’s popular senior analyst Mike McGlone observed.
Bloomberg analyst: Bitcoin and Nikkei 225 have a strong correlation!
As you follow on Kriptokoin.com, Bitcoin is stuck in a tight space. According to Mike McGlone, Bitcoin maintains a strong correlation with one of the popular Japanese market indices, the Nikkei 225. The analyst says the index can serve as a convenient guide for profiling Bitcoin’s performance. He also states that the reverse is also true. According to his post on social media platform X, both Bitcoin and Nikkei 225 have been maintaining a directional relationship for a while.
Nikkei a Guide for #Bitcoin or Vice Versa? Bitcoin has had a close directional relationship with the Nikkei 225, and recent crypto weakness may portend contagion. pic.twitter.com/XStJsPVdrQ
— Mike McGlone (@mikemcglone11) September 4, 2023
The analyst also points out the disadvantage of this relationship. Accordingly, the recent drop in crypto price could signal a contagion for the Nikkei 225 in the long run. Bulls may choose to rally around crypto to achieve a related success, such as the index retesting a new high nearly 33 years later. So it is possible that the current relationship is not in favor of the Bitcoin price.
Are the supporters of the leading cryptocurrency hibernating?
It is possible for BTC to chart this ambitious growth path. However, this success needs some very strong triggers to continue for a long time. One of these triggers materializes as a potential savings from institutional investors.
According to market experts, it is possible that the potential approval of a spot Bitcoin Exchange Traded Fund (ETF) product in the US is enough to trigger this run in price. But there is one major hurdle to overcome: the Securities and Exchange Commission (SEC). So it’s important to keep in mind that there are some arguments for Bitcoin to move in either direction.
Bitcoin price may or may not have bottomed out!
SOPR is an important metric used to measure the profitability of coins moved on the Blockchain. An asset’s SOPR greater than one means that the coins are moved with profit on average. Conversely, a SOPR value below 1 indicates that the coins carried were carried at a loss on average. Analyst Tarekonchain takes a cue from the metric’s historical precedents, noting for Bitcoin:
Market bottoms tend to occur when the SOPR falls below the critical threshold of 0.97. This means that during bear markets or major corrections, investors often surrender by selling their Bitcoin holdings at a loss, causing the SOPR to drop below this threshold.
According to the analyst, when BTC’s SOPR dropped below this critical threshold in January 2019 and April 2020, a rebound in Bitcoin price followed. “As of last November 2022, the SOPR metric briefly touched the 0.97 threshold,” Tarekonchain said. This showed that investor sentiment is approaching a critical level,” he adds.
Source: CryptoQuant
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