Bitcoin’s Correlation With U.S. Stocks Surges During Middle East Crisis

Bitcoin stock correlation
Bitcoin stock correlation

NOIDA (—Bitcoin (BTC) ‘s price climbed above $66,000 following the latest halving event. Moreover, the recent BTC price action has increased the Bitcoin stock correlation.

Despite the bearish pressure against the token coming from macro and geopolitical reasons, BTC bulls are pushing the token higher.

Bitcoin stock correlation
BTC price action over the past 7 days. Source. CoinStats

BTC price recovered from its recent trip below $60,000 on April 18. However, the promised land, the massive bull run post-halving, remains elusive.

Bitcoin Correlation With Stocks Rises

Recent geopolitical tensions in the Middle East have led to a noticeable increase in the correlation between Bitcoin and traditional stock markets. The change highlights important aspects of investor behavior and market dynamics under crisis conditions.

Risk sentiment is a primary driver of this correlation. In times of geopolitical uncertainty, investors often shift their attitudes across various asset classes simultaneously, causing both stocks and cryptocurrencies like Bitcoin to move together.

Bitcoin stock correlation
Bitcoin stock correlation increased due to the Middle East conflict.

This reaction typically occurs as investors, depending on their risk assessment, either withdraw from riskier investments or seek them out.

The prime crypto token’s correlation with the S&P 500 and the Nasdaq Composite has spiked since the conflict escalated, highlighting investor sentiment regarding risk assets. Interestingly, BTC’s correlation with Gold dropped, with XAU price dropping.

The dropping price of Gold could indicate that investors are looking to other options as haven investments.

Additionally, liquidity needs are influential. To cover losses or to shift into safer assets, investors might liquidate stocks and cryptocurrencies concurrently. This collective action can lead to synchronized price movements between these asset classes.

Institutional investors also contribute to this trend. These investors manage substantial portfolios across both markets and may adjust their strategies uniformly in response to external pressures. The strategic alignment can result in similar pricing patterns in both stocks and cryptocurrencies.

Moreover, the correlation between Bitcoin and stock markets during crises illustrates the evolving role of cryptocurrencies within the broader financial landscape and their growing integration with traditional financial systems.

BTC Price Holding On To $66,000 For Dear Life

The BTC price managed to break above $66,000 on April 22, but bears are trying to force the token below that level. Bulls desperately hold on to the 20-day EMA (red wave) trendline support.

If the BTC price holds above the trendline support, the token could rally to the resistance near $70,000.

Bitcoin stock correlation
BTCUSD daily price chart with RSI. Source:

Breaking and consolidating above the immediate resistance could help Bitcoin price rally to the resistance near $75,600. A rally in the stock market could help Bitcoin rally, thanks to the high correlation between the two sectors at the moment.

Conversely, a drop in prices would bring Bitcoin’s price to support near $63,000. Moreover, breaching the immediate support level might lead to BTC’s price dropping to the 100-day EMA (blue wave) support near $58,400.

The RSI for BTC remained neutral, clocking a reading at 50.24 on the daily charts.

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