Bitcoin and other cryptocurrencies have been seemingly moving in lockstep with the traditional stocks and bonds over the past year amid a bearish market, but on-chain indicators show that correlation is starting to fade.
Cryptocurrencies have long been seen as digital assets that don’t follow traditional markets, making them an ideal option to get uncorrelated exposure. Given the recent divergence in performance between cryptocurrencies and traditional assets, that notion may be returning.
In the meantime, cryptocurrency investors don’t appear to be buying and selling at a rapid pace relative to recent years, which can account for reduced volatility in the digital asset market. There was certainly a lot of selling in 2022 during the crypto bear market, but on-chain indicators could be signaling the end of downturn.
“Although Bitcoin and digital assets are prone to market volatility, a number of on-chain indicators — which represent collective human decisions — have remained remarkably consistent,” a Medium article said. “According to Glassnode, several on-chain indicators are pointing to a potential end (or at least a significant improvement) of bear market conditions.”
Bitcoin has been vacillating up and down the $30,000 mark most recently, pushing over a 60% gain year-to-date as it continues to recover from 2022’s bearish pressure. The price rally was helped by the recent banking crisis as fear and doubt in the traditional financial system may have pushed investors to alternative assets, including cryptocurrencies, as a hedge.
“We observe that many of these coins are being held tightly by buyers, while profits are being taken, and network utilization is improving,” the article added. “All of these factors support Bitcoin’s strong market performance so far this year.”
Getting Alternate Bitcoin Exposure
While cryptocurrencies still have a way to go in terms of getting a regulatory framework in place, this may detract investors from the space. However, there’s another option via exchange traded funds (ETFs), which can track the price movements of bitcoin.
As such, a price rally in bitcoin could offer investors opportunity in ETFs, which fall under a regulatory framework for safer investing. Among the ones to consider are the ProShares Bitcoin Strategy ETF (BITO ), the Valkyrie Bitcoin Strategy ETF (BTF ), the VanEck Bitcoin Strategy ETF (XBTF ), and the Simplify Bitcoin Strategy PLUS Income ETF (MAXI ).
For more news, information, and analysis, visit the Crypto Channel.
