Crypto prices mirror stocks’ rebound as executives buy the dip

NEW DELHI (CoinChapter.com) — The crypto market rebounded sharply on Monday, with Bitcoin (BTC) prices closing above $30,000 for the first time in eight days. The uptrend comes after a record nine red weeks for the pioneer cryptocurrency.

The overall crypto market capitalization recovered 7.5% intraday on May 30 to close the day at $1.3 trillion. Ethereum (ETH) prices also rallied to break past $2,000 before pulling back. However, WAVES was the best performer among the top 100 cryptos by market cap, jumping 109% to reach $9.65.

Crypto markets enjoyed a relief rally after nearly two months of heavy selling. To recap, U.S. Federal Reserve’s efforts to rein in inflation, coupled with the Russia-Ukraine war and the rising commodity prices, have taken a toll on risk assets globally.

Meanwhile, stock markets are holding strong with insider stock purchases rising at a rate last seen since the early days of the Covid-19 pandemic.

According to investment research platform Veritydata, insider buying amongst executives in the S&P 500 companies has been strongest since Mar 2020. In detail, traders usually consider strong insider buying a strong sign of market bottoms.

Insiders are saying ‘we don’t see a massive event coming’ . . . [that] these are really good buying opportunities. This is just another confirming data point that should be positive for the market over six to 12 months if not longer

David Giroux, portfolio manager at T Rowe Price, told FT

Also Read: Wall Street unsure when market selloff ends — is crypto the same?

Crypto Recovery Rebound Tailing The Stock Market?

The correlation between Bitcoin and the stock market decoupled last week. The Standards and Poor’s 500 (S&P 500) recorded gains of 6.94% in the week ending May 29, while BTC prices fell 8.6% between the weekly high ($30,628) and low ($28,003) levels.

However, the relief might be a bounce, considering the market’s recent trend and the investors’ extremely bearish sentiment. In addition, investors believe the decoupling might be crypto failing to recover from LUNA-collapse-led sell-offs while traditional markets enjoy a relief rally.

Bitcoin’s narrative as digital gold took a hit when the prime crypto’s correlation with traditional markets spiked. As a result, traders hoped for BTC’s decoupling from the traditional stock markets.

Ideally, a decoupling would mean bitcoin’s price diverges from equities and starts going up when equities go down. However, last week’s decoupling saw Bitcoin tanking while SPX gained, leading some investors to call the event a reverse decoupling.

Also Read: Dogecoin rallies following Elon Musk SpaceX tweet.

The crypto market’s resurgence since May 30 might have resulted from investors’ gaining confidence from the stock market rebound. However, analysts advise taking the price action with a ‘grain of salt,‘ given the bearish outlook of macro cues.

Inflation reports from Spain and Germany highlighted that the macroeconomic forces dampening crypto price action are unlikely to cease soon. The European Central Bank might be forced to remove the Covid-induced stimulus, which would force countries to raise interest rates.

Rising interest rates would likely trigger a sell-off in Bitcoin and other risk assets again. Hence, the recent crypto market rebound might not be long-lived.