- The correlation between Bitcoin and long-term bonds has fallen to its lowest level in the last year.
- This is due to the gradual change in the perception of the leading coin.
Last month Bitcoin’s [BTC] The correlation with long-term bonds has fallen to its lowest level in the last year. This signals a significant shift in the way the leading crypto asset is viewed and valued, Lucas Outumuro, analyst at IntotheBlock, noted in a new report report.
Read Bitcoins [BTC] Price prediction 2023-2024
In 2022, rising interest rates led to a decline in both long-term bonds and BTC. The value of bonds fell due to falling yields, while the value of BTC fell to multi-year lows as investors generally avoided risky digital assets.
As interest rate hikes slowed this year, the values of both assets increased.
However, long-term treasury bond prices have lagged over the past month while the price of BTC has risen, resulting in a low correlation of -0.74 between them.
According to data from IntoTheBlockIn the last 30 days, the price of BTC has increased by 7%, while the value of long-term government bond ETFs has fallen by 10%.
Source: IntoTheBlock
New perception, who is that?
According to Outumuro, the decline in correlation between the two assets is due to the changing perception of BTC. The narrative surrounding the coin has changed from being viewed as a medium of exchange to a store of value.
To support his position, Outumuro assessed BTC’s Network Value to Transactions (NVT) ratio – a measure of the coin’s market capitalization relative to its on-chain transaction volume – and found that it reached an all-time high in September.
The analyst opined that the rise in the coin’s NVT ratio signals that BTC’s value is no longer based solely on its transactional utility.
Instead:
“In 2023, we are seeing increasing demand for Bitcoin as the cracks in the traditional financial system are exposed. In March, when Silicon Valley Bank collapsed and the Fed intervened with the BTFP program, the price of Bitcoin rose over 20%.”
According to Outumuro:
“It may be too early to call for a bull market, but it is clear that the broader market has changed its tone on Bitcoin.”
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BTC on a daily chart
At press time, BTC was trading at $27,924, up 2% in price over the past 24 hours, according to data from CoinMarketCap.
As price continues to remain in a tight range, accumulation is exceeding distribution on a daily chart. At press time, the positive directional indicator (green) was at 27.83, higher than the negative directional indicator (red) at 9.17, indicating that the strength of buyers was exceeding that of sellers.
Source: BTC/USDT on Trading View
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