Bitcoin Derivatives Show Lack of Trust From Bulls

High correlation to stock markets and recession risks limit optimism from BTC investors.

Market Update

Bitcoin (BTC) has been trending higher since mid-July, although the current ascending channel formation holds support at $21,100. This trend has been going on for 45 days and could potentially drive BTC towards $26,000 by the end of August.

Bitcoin/USD price 12 hours. Source: TradingView

According to Bitcoin derivatives data, investors are pricing the odds of a slowdown higher, but recent improvements in the global economic outlook could take bears by surprise .

Correlation with traditional assets is the main source of investor distrust, especially when it comes to assessing recession risks and tensions between the United States and China ahead of the President's visit of the Nancy Pelosi Chamber in Taiwan. According to CNBC, Chinese officials have threatened to take action if Pelosi moves forward.

Recent interest rate hikes by the US Federal Reserve to curb inflation have heightened uncertainty for risky assets, limiting the rally in crypto prices. Investors are betting on a "soft landing", meaning that the central bank will be able to gradually revoke its stimulus activities without causing significant unemployment or recession.

The correlation measure ranges from a negative 1, which means some markets are moving in opposite directions, to a positive 1, which reflects perfect, symmetrical movement. A disparity or lack of relationship between the two assets would be represented by 0.

S&P 500 and 40-day Bitcoin/USD correlation. Source: TradingView

As shown above, the 40-day correlation between the S&P 500 and Bitcoin currently stands at 0.72, which has been the norm over the past few years. last four months.

In chain and...