The Crypto Market is Gaining; Ethereum is Now Closer to the S&P 500 than Bitcoin
According to Santiment data, Ethereum has been pegged even closer to the S&P 500 than Bitcoin over the last month. Its correlation with the SP500 has been much tighter than Bitcoin’s in recent times. Also, gold has had a spot-on inverse correlation to both.
What this Means for Ethereum
Ethereum’s price gained on Wednesday, extending its previous session gains. Although it is still below the psychological $2,880 mark, it still has room to rise. The king alt has dropped dramatically from it’s all-time high during the recent four months. There was a battle between buyers and sellers near the $3,100-mark point of control.
The S&P 500 index is a market capitalization-based index that gauges the value of the 500 largest firms listed on the New York Stock Exchange or the Nasdaq Composite. Stronger correlations suggest that Ethereum has been acting as a risky asset. Its correlation with stocks has surpassed other gold, investment-grade bonds, and major currencies. As a result, risk diversification advantages are limited in contrast to what was first assumed.
The increased connection between crypto and stocks enhances the prospect of investor sentiment spillovers between those asset classes. Indeed, an examination of price and volatility spillovers between crypto and global equity markets indicates that spillovers from Bitcoin returns and volatility to stock markets, and vice versa, have increased dramatically in 2020–21 compared to 2017–19.
Bitcoin and other major currencies rose significantly on Wednesday evening following the release of details of US President Joe Biden’s executive order on digital assets. The worldwide cryptocurrency market capitalization increased 5.9 percent to $1.9 trillion.
Ethereum Price is Currently in Correction
Ethereum continued to rise past the $2,700 mark this week. It even broke beyond the $2,750 barrier level, but investors met it with stiff resistance at $2,780.
The crypto then established a peak around $2,775, and the price began to decline. Below the $2,700 and $2,650 marks, there was a break. The ether cost has fallen below $2,650 and the 100 hourly simple moving average. The price fell below the 50 percent Fib retracement level of the upward run from the swing low of $2,445 to the high of $2,775.
Furthermore, on the hourly chart of ETH/USD, there was a break below a key bullish trend line with support near $2,660. The pair is now edging closer to the $2,570 support level. It is close to the 61.8 percent Fib retracement level of the upward run from the swing low of $2,445 to the high of $2,775.
If ether price remains above the $2,570 support level, it may begin a new upward trend. On the upside, an initial resistance level is at $2,620. The first significant resistance is expected near $2,650 and the 100 hourly simple moving average. The next considerable obstacle is at $2,780, above which the price might move higher.
Bitcoin and Gold Price Dips
Bitcoin price continued its upward trend and reached the resistance zone of $42,000. It then started a downside correction after reaching a high of $42,547. Further, there was a minor decline below the $41,650 support level.
The bulls are expected to push the price to another weekly high above the $42,500 region. A break above this level would target the $43,200 region.
Meanwhile, demand for safe-haven assets such as gold and silver eased after a top official of Ukraine stated that the country would not surrender its territory to Russia. Gold fell 0.5% to $1,982.31 an ounce in Singapore after losing 2.9% the previous day. It was the most significant decline since January 2021.
