- With Bitcoin now at $20,000, it has given away all its price gains in 2021.
- According to data from Skew, even though the correlation between BTC and S&P 500 has dipped sharply during the end of May, the correlation has spiked again in the June sell-off.
The June swoon has been real this year, with sell-offs sending market participants across different asset classes into a panic. Since the start of June, the crypto market capitalization has fallen by more than 30% to $886 billion at the time of writing.
With Bitcoin now at $20,000, it has given away all its price gains in 2021. However, the king coin’s recent performance has been much better than the broader market. In comparison to the blockchain tokens like ETH (the native token of Ethereum) and SOL (of Solana), which have declined by more than 45% since the start of June, BTC has fallen by only 30% in the same time period.
Due to this, the altcoin fever that peaked in 2021 is now beginning to calm down. The percentage of BTC-related discussions has returned to the key level of 20%, which can be considered a healthy market focus level for the crypto community. Based on historical evidence, whether a higher level of discussion rate towards Bitcoin is caused by bullishness or bearishness, crypto markets tend to benefit from higher discussion rates.
While is true that the crypto assets perform better when it has a low dependency on the equities market. Crypto and equities markets have been moving in tandem throughout 2022. Due to this correlation, sell-offs in the equities market trigger sell-offs in the crypto market, even though some of the cryptos are already trading at their yearly lows.
According to data from Skew, even though the correlation between BTC and S&P 500 had dipped sharply during the end of May, the correlation has spiked again in the June sell-off. At the time of writing, the metric stood at 54.3%, nearly triple the 19.8% correlation on June 9.
Increasing inflation concerns and legitimate recession fears are impacting crypto the same way they impact real corporations. This is why a lot will depend on external economic conditions going forward rather than internal fundamental factors.