Since the start of the third quarter, the leading cryptocurrency and the S&P 500 have fallen by 14% and 3%, respectively. The reason lies in rising yields on risk-free U.S. government bonds, CoinDesk reports.
The equity risk premium—the difference between the earnings yield of the components of the S&P 500 relative to their prices and the yield on UST 10Y—fell to -0.58, the lowest since 2009. Since 2008, the metric has averaged about 3.5 percentage points.
If dividend yield is considered alone, the gap with the 10-year U.S. Treasuries yield narrowed to -2.87 percentage points, the lowest since July 2007.
In other words, the appeal of investing in equities and other risk assets has dimmed in the face of the much higher yields on U.S. Treasuries, regarded as safe-haven assets.
Such a situation also implies less incentive to invest in Bitcoin, if it is viewed as analogous to technology stocks.
Against a backdrop of Bitcoin’s resilience, Bitcoin’s correlation with the U.S. dollar has fallen to zero, while correlations with the major stock indices have become mildly negative.
Bitcoin’s correlation with the US Dollar Index has hit a remarkable milestone—zero. Interestingly, there is currently almost no correlation with any of the major indices. As Bitcoin charts its own course, the question arises: is this a bullish or bearish signal?
Explore More… pic.twitter.com/M5IzB6nux6— IntoTheBlock (@intotheblock) September 21, 2023
According to Lucas Outumuro of IntoTheBlock, the resilience of digital gold is explained by positive launch expectations of a spot Bitcoin-ETF and the transfer of compensation payments to Mt.Gox clients.
The trend appears to signal a forthcoming bullish cycle. While it’s unclear how long this will last in a deteriorating macroeconomic environment, on-chain data show further accumulation by hodlers, — said the expert.
In ABMCrypto, citing NVT, aSORP and CDD metrics, they noted a lack of bear activity. The technical setup, in RSI, Chaikin Money Flow and MACD, suggests a chance of resuming positive momentum after some consolidation, journalists added.
Despite Uptober looming over risk assets, the prospect of a government shutdown due to budget disagreements weighs on markets.
Major October Catalysts (Part 2)
Predictive markets now anticipate a 70% of a Government Shutdown on October 2.
Millions of federal workers face delayed paychecks when the government shuts down, including many of the roughly 2 million military personnel and more than 2 million… pic.twitter.com/XTrt0g06t2
— Joe Carlasare (@JoeCarlasare) September 24, 2023
Markets now expect a government shutdown on October 2 with more than 70% probability, — said Joe Carlasare, a partner at SmithAmundsen LLC.
Earlier, BitMEX co-founder Arthur Hayes allowed for a possible brief dip below $20,000 followed by a new bullish impulse. However, in September he pointed to positive prospects for digital gold despite the policy of the the Fed.
Rick Edelman, founder of Edelman Financial Engines, forecast that the price of the leading cryptocurrency would rise to $150,000 by the summer of 2025.