Last week, several factors influenced the market and contributed to the fall in the price of bitcoin and other cryptoassets. One of them – but not the only one – was the possibility of a ban on the sector in Russia, advocated by the country’s Central Bank, which sees digital currencies as a risk to the economy. However, the measure was not accepted by the Russian government and parliamentarians.
Fears of higher interest rates in the United States also impacted the market, as well as the decline of the S&P 500 – the largest since the beginning of the pandemic.
According to Transfero’s technical analysis, the descending triangle, highlighted last week (between January 20th and 27th), presented a rupture of the Support Line, reinforcing the bearish trend and showing that the selling force has been standing out in relation to buyers.
This downward movement with high volume broke through the US$ 37,500 support, as shown in the chart below. There was a slight recovery, and the price is now (as of January 27) around US$ 37,000.
“Another point to note is that the correlation between BTC and the S&P 500 has increased greatly in recent weeks, showing that the two assets are moving more in sync than was expected”, Transfero experts pointed out.
According to the analysts’ explanation, the correlation coefficient ranges between 1 and -1. When it is 1, the assets are moving together; when it equals -1, they are moving in opposite directions.
At the moment, the correlation is above 0.45 points. This may explain the recent fall in BTC, as the S&P 500 recorded its largest weekly decline since the start of the pandemic in 2020, as investors rushed for liquidity to raise funds and stem losses on the major exchanges.