Bitcoin’s recent performance has raised questions about its correlation with the S&P Index, as BitMEX co-founder Arthur Hayes suggests a shift in expectations. The divergence follows the approval of Bitcoin exchange-traded funds (ETFs) in the United States by the SEC on January 11, 2024.
Loss of Correlation with S&P Index
The flagship cryptocurrency has recently found itself in a bearish zone, prompting discussions about its correlation with the S&P Index. BitMEX co-founder Arthur Hayes has highlighted a noticeable divergence in the price movements of these two assets.
According to Hayes, this shift in correlation began shortly after the launch of spot Bitcoin exchange-traded funds (ETFs) in the United States.
The highly anticipated launch of Bitcoin ETFs on January 11, 2024, marked a significant milestone for the cryptocurrency market. The approval by the US Securities and Exchange Commission (SEC) allowed multiple pending applications to proceed. This development was expected to institutionalize Bitcoin as a mainstream asset and potentially drive its price higher.
In a recent tweet, Arthur Hayes shared a snapshot that demonstrated the contrasting price movements of Bitcoin and the S&P Index. He emphasized that this divergence suggests different future expectations for the two assets. While Bitcoin appeared to be signaling potential challenges, the S&P Index’s performance indicated a more optimistic outlook.
Upcoming metrics to watch
Hayes also pointed out that certain crucial metrics expected to be released by the end of the month could shed light on whether bearish concerns for Bitcoin are warranted. He specifically mentioned the significance of the “31st January US Treasury refunding announcement” as the next important signpost to monitor.
Following the approval of the ETFs, Bitcoin initially experienced a sporadic increase in its price. However, this bullish momentum was short-lived, as the cryptocurrency subsequently witnessed a steep decline in its value. This decline effectively erased the gains Bitcoin had accumulated in the weeks leading up to the ETF approval.
As of the time of writing, Bitcoin is trading at $40,933, based on data from CoinMarketCap. The cryptocurrency’s recent price performance has left investors and analysts with mixed sentiments about its future trajectory.
ETFs continue to attract investor interest
Despite Bitcoin’s recent bearish performance, the newly launched ETFs have continued to garner significant interest from investors. Within the first week of trading, two ETFs had already amassed over a billion dollars in assets under management. Market expectations suggest these ETFs will likely continue attracting capital inflow in the coming weeks.
The reaction of Bitcoin’s price to the approval of ETFs has defied some analysts’ expectations. The institutionalization of Bitcoin as a mainstream asset was anticipated to impact its price positively. However, the recent bearish trend has left some market participants questioning whether Bitcoin will reach its predicted all-time high of approximately $100,000 before the end of the year.