The 13% gains in the six days leading to Sept. 12 brought the total crypto market capitalization closer to $1.1 trillion, but this was not enough to break the descending trend. As a result, the overall trend for the past 55 days has been bearish, with the latest support test on Sept. 7 at a $950 billion total market cap.
Total crypto market cap, USD. Source: TradingView
An improvement in traditional markets has accompanied the recent 13% crypto market rally. The tech-heavy Nasdaq Composite Index gained 6.2% since Sept. 6 and WTI oil prices rallied 7.8% since Sept. 7. This data reinforces the high correlation versus traditional assets and places the spotlight on the importance of closely monitoring macroeconomic conditions.
The correlation metric ranges from a negative 1, meaning select markets move in opposite directions, to a positive 1, which reflects a perfectly symmetrical movement. A disparity or a lack of relationship between the two assets would be represented by 0.
Nasdaq futures and Bitcoin/USD 50-day correlation. Source: TradingView
As displayed above, the Nasdaq composite index and Bitcoin 50-day correlation currently stand at 0.74, which has been the norm throughout 2022.
The FED’s Sept. 21 decision will set the mood
Stock market investors are anxiously awaiting the Sept. 21 U.S. Federal Reserve meeting, where the central bank is expected to raise interest rates again. While the market consensus is a third consecutive 0.75 percentage point rate hike, investors are looking for signs that the economic tightening is fading away.
A report on the U.S. Consumer Price Index, a relevant inflation metric, is expected on Sept. 13 and on Sept. 15, investor attention will be glued to the U.S. retail sales and industrial production data.
Currently, the regulatory sentiment remains largely unfavorable, especially after the enforcement director for the United States Securities and Exchange Commission (SEC), Gurbir Grewal, said the financial regulator would continue to investigate and bring enforcement actions against crypto firms.
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