Daily Crypto Update 01/12/2022
In today’s letter:
✔️Bitcoin’s correlation with S&P 500 and Nasdaq hit new highs
✔️Powell: FED report on crypto and CBDCs is ready to go
✔️Bitcoin Magazine banned by YouTube
✔️Bitcoin’s correlation with S&P 500 and Nasdaq hit new highs
Historically, Bitcoin used to maintain a low correlation to other risky assets such as stocks and commodities. However, during the last weeks the correlation between Bitcoin and the leading index - S&P 500 and Nasdaq - has been on a rise. On Wednesday the metrics hit their highest levels since July 2020 with 0.61 and 0.58 according to data from Kiako.
The coefficient of correlation is a number between -1 and 1. The closer it is to -1, the stronger the negative correlation is (i.e the price of Bitcoin and the stocks are moving in a different direction). If the coefficient is closer to 1, there is a positive correlation (the price of Bitcoin and the stocks are moving in one direction).
Last week was terrible for the whole crypto market. Bitcoin was trading below $40 000 and Ethreum saw levels of $3 000.
In its last session, the FED announced that it's going to change its policy in 2022 by increasing the interest rates and reducing its bond purchases. While trying to reduce inflation the FED could change investors’ perspectives and make risk assets (which include Bitcoin and stocks) less attractive.
✔️Powell: FED report on crypto and CBDCs is ready to go
Talking about FED’s policy Jerome Powell announced that the FED report on crypto and CBDCs are ready to go and will be published “in comming weeks”.
The statement will be focused on CBDCs. After China revealing its digital yuan and released its digital wallet last week, the USA feels that it's time to take action. Powell has been talking about the digital dollar for a while but he also noted that “It's far more important to do it right rather than to do it fast”.
✔️Bitcoin Magazine banned by YouTube
Bitcoin Magazine’s channel was restored after it was temporarily down without prior warning.
Earlier today YouTube banned the channel in the middle of a live stream. The topics that the show was covering were Elon Musk, Jack Dorsey, and Kazakhstan where the government shut down the internet leaving all Bitcoin miners in the dark.
However, the channel was restored a few hours later. Last year Pomp’s YouTube channel was banned without any reason.