Key takeaway:
Bitcoin (BTC) rose 3.5% between June 7 and June 9, approaching the $108,500 mark. Despite this recent uptick, professional traders remain notably cautious, as reflected in BTC derivatives metrics. Broader macroeconomic tensions persist, and Bitcoin continues to show a strong correlation with the stock market, limiting its short-term upside potential.
Some analysts anticipate Bitcoin could rally to $150,000 as the US government nears a $4 trillion increase to its debt ceiling. However, futures market data suggests short-term hesitance, likely driven by unfavorable macroeconomic signals and a misreading of Bitcoin’s potential supply shock.
Bitcoin 2-month futures annualized premium. Source: laevitas.ch
Since June 6, Bitcoin futures premiums have hovered near the 5% baseline typical of neutral markets. The recent price increase has yet to inspire significant confidence among traders. Still, it would be inaccurate to say sentiment is entirely pessimistic, especially with Bitcoin currently trading just 3% below its $111,965 all-time high set on May 22.
The recent price movement was not driven by excessive leveraged speculation, an indicator of a healthy market foundation. However, if recession fears persist, Bitcoin is unlikely to maintain levels above $110,000, given its continued correlation with traditional equity markets.
50-day correlation, Bitcoin/USD vs. S&P 500 futures. Source: TradingView / Cointelegraph
At present, Bitcoin’s correlation with the S&P 500 stands at 82%, meaning the two assets have moved in similar directions. This trend has held for the past four weeks. Although the correlation has fluctuated over the past nine months, investors largely still treat Bitcoin as a risk-on asset rather than a reliable hedge.
Bitcoin could struggle against broader economic headwinds
Investors’ concerns have been reinforced by previous instances when the US trade war intensified, negatively affecting nearly every asset class, including equities, oil, and Bitcoin. Still, Bitcoin was designed precisely for periods of financial uncertainty. If confidence in the US government’s fiscal stability…
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