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ARK: “Bitcoin’s Correlation With The S&P 500 Reached” ATH, Opportunity Knocks

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This counterintuitive thinking by ARK Investment is the reason why we subscribe to their  “The Bitcoin Monthly” report. While everybody complains about bitcoin’s dance in unison with the stock market, they keep it cool and even frame it as an opportunity. Which it is. It’s not ideal that traders treat bitcoin like a risk-on asset, but there’s certainly logic behind it. Short-sighted people see bitcoin as an investment vehicle and little else. Excited to introduce the first official issue of “The Bitcoin Monthly” Starting this month, ARK will be publishing an in-depth report covering Bitcoin’s market action and sharing where we think the market's headed. Here are the major highlights from this month’s report: — Yassine Elmandjra (@yassineARK) June 3, 2022 In our first article about “The Bitcoin Monthly,” we defined it as: “Over at Twitter, ARK Analyst Yassine Elmandjra described “The Bitcoin Monthly” as: “Starting this month, ARK will be publishing an in-depth report covering Bitcoin’s market action and sharing where we think the market’s headed.” On ARK’s website, they describe the new venture as: “Considering the market’s fast pace of change, ARK publishes The Bitcoin Monthly, an “earnings report” that details relevant on-chain activity and showcases the openness, transparency, and accessibility of blockchain data.” BTC p- S&P500 Correlation | Source: “The Bitcoin Monthly” ARK On Bitcoin’s Correlation With The S&P 500 When the Russia/ Ukraine conflict started, it seemed like bitcoin was not in synch with traditional markets anymore. However, the tide quickly turned. By May, “Bitcoin’s correlation with the S&P 500 reached an all-time high of 80%.” The previous ATH was way back in October 2020, near that magical time when bitcoin woke up from a hundred years’ nap to pass the $20K line for the first time.  "If your time horizon is one month, Bitcoin looks like a volatile asset. If your time horizon is 10 years, it looks like a risk-off store of value." – @saylor I couldn't agree more. — Dr. Jeff Ross (Pleb counselor) (@VailshireCap) June 15, 2022 So, what’s ARK ‘s take on the situation? Well… “Based on fundamentals, we believe bitcoin and most equities should not be highly correlated, highlighting a potentially significant market inefficiency.” A “significant market inefficiency” is an investor’s wet dream. It means that you’re seeing something that the market’s not. It means opportunity. If you play your cards right, it could mean money. How to use that “significant market inefficiency” in your favor, that’s another question altogether. Take into account that “Bitcoin still faces an uncertain macro environment, as the global economy shows signs of a recession,” though. Let’s also take into account these recent words by MicroStrategy’s Michael Saylor, “If your time horizon is one month, Bitcoin looks like a volatile asset. If your time horizon is 10 years, it looks like a risk-off store of value.” Apparently, bitcoin traders suffer from high time preference. And that probably explains the correlation with the S&P 500. BTC price chart for 06/16/2022 on Binance | Source: BTC/USD on TradingView.com Arcane Research Weights In ARK isn’t the only game in town. Our friends at Arcade Research have the most recent information regarding bitcoin’s correlation with the S&P 500, “BTC followed U.S. markets closely on Friday and, in extension, also during this weekend. However, as prices plummeted, new ghosts emerged, and the dangers of impactful insolvencies have contributed to further drag on the crypto market,” they say in “The Weekly Update’.” When Arcane Research says “ impactful insolvencies,” they certainly refer to the Celsius case. “While the crisis in Celsius has contributed to putting a further drag on the market, the initial catalyst was the inflation surprise in the U.S. We note a decline in the 90-day correlation between BTC and S&P 500. However, short-term correlations grew heavily following Friday’s inflation news – with the market preparing for more hawkish policies enacted by the FED.” The fact of the matter is that bitcoin’s price is determined at the edges of the network. And high time preference people are trading there. And if they want to treat bitcoin as a risky asset, there’s nothing anyone can do about it. Except, somehow, taking advantage of the opportunity it brings. Featured Image by Sergei Tokmakov Terms.Law from Pixabay | Charts by TradingView and “The Bitcoin Monthly”

Crypto News

Tron Falls Sharply As Sun Scrambles To Save Stablecoin

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Tron price momentum faded over the weekend, and the price has dropped by more than 40% since then. The cryptocurrency is presently having difficulty gaining traction. Tron Falls AS USDD  Depegs TRX has dropped 19% and is now trading at $0.05, its lowest level in 15 months. In the last 24 hours, the token has also been the worst performer among the top 50 cryptocurrencies. The token’s weakness follows the loss of the USDD algorithmic stablecoin’s dollar peg, despite founder Justin Sun’s repeated efforts to keep the peg. In the last 24 hours, the token’s entire market valuation has dropped by nearly 1% to $701.4 million. The token has garnered comparisons to Terra’s UST stablecoin, which vanished in May due to its algorithmic nature. USDD/USDT breaks dollar peg. Source: TradingView Fear began as soon as the USDD’s 1:1 peg to the dollar was lost. TRX hasn’t been able to reverse the downward trend since then, plummeting by more than 40% in less than a week. TRX may face tremendous sell pressure to close the gap as long as USDD is below one dollar. TRX has found support at the $0.05 level, from which it has bounced higher. TRX’s resistance is at $0.057, and given the current fundamentals, it doesn’t appear likely that the trend will shift. Related reading | TRON Has a Record-Setting Month Justin Sun Scrambles To Save USDD However, Tron, like Terra, is putting billions of dollars behind the coin. Because USDD is not as large as UST, which was worth roughly $20 billion at its peak, crypto specialists think that it will not suffer the same fate. USDD had recently been changed by Tron’s Sun to strengthen collateralization and make it less vulnerable to a crash like Terra. This week, Tron spent over $700 million on the open market to sustain the USDD peg. Justin Sun also stated that a $2.5 billion fund would be set up to help TRX. Tron has purchased TRX on multiple occasions to support the token, most notably withdrawing $948 million ($47 million) from Binance. The Tron DAO has made a number of withdrawals from Binance and has also used its USDC assets to purchase more tokens. Tron has also announced a mining pool with Curve Finance and Convex Finance, which is intended to attract yield-hungry traders with an estimated APR of 96.25%. Despite Justin Suns’ assertions that the USDD is unduly collateralized, the market does not appear to agree. The trend for TRX is likely to be negative as long as this continues, and the next significant support is identified at $0.040. Related reading | Why TRON Has Seen a 45% Hike in Total Value Locked (TVL) Featured image from Pixabay, chart from TradingView.com