Market Research Report: Stocks, BITCOIN and Correlation with Traditional Financial Markets.

During the Easter break last weekend, after the March inflation report was released, US stocks closed slightly higher than expected: the CPI rose 8.5% above consensus expectations. is 8.4%. Supplier prices were also higher than expected, with the PPI rising 11.2% from a year ago and marking the biggest gain since 2010; The S&P 500 index fell 2.13% in the four-day trading week, while the tech-focused Nasdaq lost 2.63% and the Dow closed down 0.78%.
The greenback has been stronger all week, with the DXY trading above 100. Treasury yields have therefore edged higher, with benchmark 10-year US Treasury yields rebounding to multi-year highs. year, climbing 13 basis points to a peak of 2.8% late Thursday.

Rising rates aren’t just a problem for the US as Britain and New Zealand have already started to raise rates, and although rates have yet to raise rates, the ECB confirmed that it will end its net asset purchases in the quarter. Tuesday after EU inflation hit a record high of 7.5% in March.
Following the initial reaction to the IEA’s release of oil reserves, oil prices recovered to post significant gains last week after the IEA warned on Wednesday that about 3 million barrels of Russian oil per day could be closed. closed from May onwards due to sanctions. or the buyer voluntarily avoids Russian goods. The EU countries are voluntarily cutting their energy imports from Russia since May, which could increase the shortage of oil supply to these countries, thereby pushing up oil prices in the market. higher. As market participants readjusted their positions to account for the new situation, Brent crude gained 9.8%, while WTI crude gained 9.1% last week and opened the week higher 1%.

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Inflation pushes oil up, the negative impact of the sell-off of tech stocks on the crypto market
Although the market action is much calmer when compared to Oil, the precious metal is still up despite the strengthening USD. For the week, Gold is up 1.2%, while Silver is up 2.65%. In the new week, both metals are trading around 0.7% higher.
However, the safe-haven has recently been perceived differently, cryptocurrencies are not as strong as precious metals as the sell-off in tech stocks has negatively impacted traders’ impressions of the cryptocurrency. cryptocurrencies although the two assets do not have much in common.

As a result, BTC fell 7% on Monday as tech stocks globally came under selling pressure and failed to hold onto a small midweek technical recovery after platform LUNA announced it had bought more. 2,500 BTC on Wednesday. Although BTC price did not recover, it has spent the rest of the week low and is consolidating around $40,000. This weakness in BTC price is spreading to altcoins, who have spent the week swinging near their lows made in the last week.
However, as the new week kicked off in Asia, the impact of falling equity markets in Asia sent crypto prices back down, with BTC breaking below the psychological $40,000 level.

Traditional finance weakens BTC
The recent trajectory of BTC’s price has puzzled some crypto-native investors as past geopolitical tensions have often seen a stronger BTC. An examination of several indicators seems to suggest that the current lackluster BTC price action could be attributed to traditional financial traders taking short-term momentum trades. We look at some of the traditional financial influences below.

First, BTC’s correlation with Nasdaq has hit a new high, so dismantling tech stock positions has traders dumping BTC as well. It is worth noting that the price of BTC from 2013 is inversely related to tech stocks until COVID dumping and pumping in 2020. While the correlation is currently high, it does not necessarily guarantee that this relationship will stay that way. Just like before 2013, BTC also had a positive correlation with Nasdaq, which then split and turned negative.
Another popular trading method that is heavily used by traditional financial traders is leveraged trading. As can be seen in the chart below, BTC leverage broke yet another ATH early last week when BTC price dipped below $40,000. This could imply that most leveraged trades are short-term as the ratio continues to hover at its peak despite a BTC price drop of over 18% from a week ago. If those positions are long trades, the rate will start to decrease as long positions are liquidated.
Crypto natives don’t usually do a lot of leveraged trading on centralized exchanges as even the silliest do it on DEXes, which is not captured in the chart below.

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Another group of traditional financial investors that may have sold are crypto fund products, which saw outflows totaling $134 million last week, marking the second-largest weekly outflow in the past week. this year.
BTC has faced the brunt of outflows, totaling $132 million, and even seen a $2 million inflow into BTC short investment products, the largest outflow on record. Collective investment funds are often structured for traditional financial participants.
BTC whales accumulate more and more
While traditional financial traders can sell BTC due to a drop in the price of tech stocks, crypto whales are looking for whatever these newer crypto investors are looking for. recent sale, as can be seen in the jump in whale wallet balances of BTC holders with over 1,000 BTC.
At the same time, on Friday, a single transaction of 29,400 BTC was withdrawn from an exchange. There is a lot of speculation that this withdrawal happened at Coinbase Pro.

As a result of these recent purchases, BTC’s net position change is showing one of the highest amounts of BTC being withdrawn from exchanges in recent times. There are only 3 other cases where we have seen this much BTC being withdrawn from exchanges at this rate. On the previous three occasions, the price of BTC has increased in the weeks and months that followed.
Thus, looking at the above information, one can see that although BTC price looks weak, on-chain activity seems to be giving a different signal.
One particular metric, the Z-score, even gives a bullish signal. From the chart below, one can see that the BTC Z-score has bottomed out and is trending up. This has only happened 3 other times in the past, and each time after the Z-score goes up, a new uptrend in BTC price follows.
Two legacy tokens show underlying strength
While most cryptocurrencies have had a quiet week of consolidation while BTC tries to bottom, two older coins from crypto’s early days have shown some interesting activity. The first is LTC.

Following our previous observation of increased whale accumulation on LTC, last week continued to see large transactions on the LTC network. In fact, Thursday saw an 11-month high trading volume of 5,508 LTC recorded on the network, while activity was also at a high throughout the week, an indication that there is a lot of trading. whales are happening. In the past, when such massive accumulation of volume occurred, the price of LTC skyrocketed in the weeks that followed.

Another legacy token that has seen a surge in activity last week is XRP, which has seen frequent injections over the past two years as “small wins” in the Ripple lawsuit often drive the community to bullish on XRP. . This time too, with the price of XRP skyrocketing after Ripple CEO Brad Garlinghouse revealed in an interview with CNBC that the lawsuit with the SEC went extremely smoothly for Ripple. However, as the broader crypto market fell back to start the week, XRP made a parallel comeback, offering traders who missed out on a chance to pick up some tokens at a good price.

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