Bitcoin’s Correlation with Stock Market Strengthens Amid Macro Data Anticipation

The performance of the leading cryptocurrency has become more closely aligned with the stock market as traders maintain a cautious stance ahead of the release of the US Consumer Price Index (CPI) and the Federal Reserve’s Fed rate decision.

According to the CME FedWatch Tool, 99.4% believe the agency will not change the key rate at the upcoming meeting on June 12. Similarly, negative forecasts prevail for July 31, with 91.1% expecting the current level to be maintained.

However, expectations for the September meeting show a shift in sentiment, with 48.3% predicting a rate cut of 25 basis points.

On June 12, the market also anticipates the release of the CPI. In May, the index’s publication, which was below forecasts, led to a strengthening of bitcoin.

In early June, amid positive sentiment, digital gold approached the $71,000 mark. However, following US unemployment data, the asset’s quotes fell below $69,000 and have continued to decline since.

At the time of writing, the leading cryptocurrency is trading at $67,090, having dropped 3% over the week. Its market capitalization stands at $1.32 trillion.

The rest of the crypto market has also entered the “red zone.”

Meanwhile, the S&P 500 futures show a negative trend, losing 0.3% over the day.

Deribit CEO Luke Strijers told The Block that bitcoin is showing an unusually high correlation with risk assets and “even with gold.”

“Traders are likely to become more conservative, potentially reducing risks or using hedging option strategies until more clarity on economic prospects emerges. Implied volatility has decreased across the curve for bitcoin and Ethereum,” he added.

Suspicious Signals

Despite the overall crypto market downturn, open interest (OI) in bitcoin options continues to rise. According to technical analyst Ali, the aggregate figure from all exchanges is near a historical high at $18.75 billion.

#Bitcoin open interest is hovering around all-time highs, at $18.752 billion! This signals increased trading activity, strong $BTC market sentiment, and potential for higher volatility. pic.twitter.com/0RaWn6T4da

— Ali (@ali_charts) June 11, 2024

“This signals increased trading activity, strong sentiment in the leading cryptocurrency market, and potentially higher volatility,” the expert explained.

However, some market participants are wary of the situation. Decentrader founder, known as filbfilb, noted that bitcoin’s price has remained flat while OI has increased by $1.5 billion.

Price flat, OI up $1.5bn

High-risk situation. https://t.co/9eJMdcIE7R pic.twitter.com/7ouo02X8yP

— filbfilb (@filbfilb) June 11, 2024

“High-risk situation, hasn’t happened in a long time. Survive,” the post reads.

User ByzGeneral emphasized that open interest “is rapidly rising again” and has almost returned to the previous level when the market experienced a “sudden nuclear bomb,” referring to the sharp correction in early June.

During the current downturn, the meme token sector suffered the most. Its index on CoinGecko fell by 11% over the week, and total capitalization dropped by 7.6% in the past day.

Almost all major meme coins showed a decline — SHIB (-8.5% over the week), DOGE (-13%), PEPE (-17.1%), WIF (-21.2%), and BONK (-15.3%). Among relatively large coins, only BRETT gained 37%.

On June 10, a 19-day streak of inflows into spot bitcoin ETFs was interrupted. The net outflow from funds reached $64.9 million in a day.

Previously, former BitMEX CEO Arthur Hayes noted a change in the macroeconomic backdrop and urged buying the leading cryptocurrency.

According to Bitfinex experts, during the current bull market, bitcoin will form a peak at some point in the fourth quarter of 2024. They also noted the potential for further growth.