- The correlation between Bitcoin and long-term bonds has fallen to its lowest level in the past year.
- This is due to the gradual change in the perception of the leading currency.
In the past month, Bitcoin’s [BTC] The correlation with long-term bonds has fallen to the lowest level in the past year. This signals a significant shift in the way the leading crypto asset is viewed and valued, IntotheBlock analyst Lucas Outumuro noted in a new report. report.
Read Bitcoin’s [BTC] Price forecast 2023-2024
In 2022, rising interest rates led to a decline in both long-term bonds and BTC. Bond values fell due to a drop in interest rates, while BTC’s value plummeted to a multi-year low as investors generally shun risky digital assets.
While interest rate increases slowed this year, the values of both assets rose.
However, long-term government bond prices have lagged over the past month, while the price of BTC has risen, resulting in a low correlation of -0.74 between the two.
According to data from InTheBlokOver the past 30 days, the price of BTC has risen 7%, while the value of long-term government bonds (ETFs) has fallen 10%.
Source: IntoTheBlock
New perception, who is this?
According to Outumuro, the decrease in correlation between the two assets is due to the changing perception of BTC. The narrative around the currency has shifted from a medium of exchange to a store of value.
To support its position, Outumuro assessed BTC’s Network Value to Transactions (NVT) Ratio – a measure of the coin’s market capitalization relative to on-chain transaction volume – and found that it reached an all-time high in September.
The analyst believed that the rise in the coin’s NVT ratio was a signal that BTC’s value is no longer based solely on its transactional utility.
Instead of:
“In 2023, we have seen demand for Bitcoin increase as the cracks in the traditional financial system have been exposed. In March, when Silicon Valley Bank collapsed and the Fed intervened with the BTFP program, the price of Bitcoin rose by more than 20%.”
According to Outumuro:
“It may be too early to start calling for a bull market, but it is clear that the broader market has changed its tune on Bitcoin.”
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BTC on a daily chart
At the time of writing, BTC was trading at $27,924, representing a 2% price increase over the past 24 hours, according to data from CoinMarketCap.
While price remains stuck within a narrow range, accumulation exceeds distribution on a daily chart. At the time of writing, the positive directional indicator (green) was at 27.83, positioned higher than the negative directional indicator (red) at 9.17, indicating that the power of buyers is greater than that of sellers.
Source: BTC/USDT on Trading View
