Bitcoin Still Highly Correlated to Economic Conditions, Says Glassnode

Bitcoin’s price is still highly concentrated on the Fed’s monetary policy as “more institutional capital enters the space,” Glassnode wrote in a recent report. While Wall Street is selling stocks and bonds over the Fed’s efforts to sustain inflation risks, bitcoin is losing the most, falling in a moment down to $30,000.

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Glassnode says such a correlation between traditional markets and the cryptocurrency is the result of dependence on the broader economic conditions:

“Wider markets responded in a volatile manner to the Federal Reserve announcement of further rate hikes, which whilst expected, does confirm increasingly tight liquidity across markets.”

Analysts note traders should not expect bitcoin to hit new records anytime soon as there are still a number of signals of net weakness in the space, many of which indicate that risk-off sentiment “remains the core market position at this time.”

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In March, Federal Reserve Chairman Jerome Powell speaking on a panel by the Bank for International Settlements cautioned that cryptocurrencies and stablecoins present risks to the whole US financial system and, therefore, require “new rules to protect consumers.” Although new types of money can make payments cheaper and faster, they also destabilize existing financial institutions, the Fed head reiterated.

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