Bitcoin and other cryptocurrencies have apparently been moving in unison with traditional stocks and bonds for the past year amid a bear market, but on-chain indicators show the correlation is starting to fade.
Cryptocurrencies have long been viewed as digital assets that don't follow traditional markets, making them an ideal option for gaining uncorrelated exposure. Given the recent divergence in performance between cryptocurrencies and traditional assets, that notion may be making a comeback.
Meanwhile, cryptocurrency investors do not appear to be buying and selling at a rapid pace relative to recent years, which may explain the lower volatility in the digital asset market. There was certainly plenty of selling in 2022 during the cryptocurrency bear market, but on-chain indicators could be signaling the end of the recession.
"Although Bitcoin and digital assets are prone to market volatility, a number of on-chain indicators, representing collective human decisions, have remained remarkably consistent." an average article said. "According glass nodeSeveral on-chain indicators point to a possible end to (or at least a significant improvement in) bear market conditions."
Bitcoin has been bouncing back and forth at the $30,000 mark most recently, fueling a 60% year-to-date gain as it continues to recover from the bearish pressure of 2022. The price rally was helped by the recent banking crisis, as fear and doubt in the traditional financial system may have pushed investors to alternative assets, including cryptocurrencies, as a hedge.
โWe note that many of these coins are being held heavily by buyers, while gains are being made and network utilization is improving,โ the article added. "All of these factors support the strong performance of the Bitcoin market so far this year."
Get Alternative Bitcoin Exposure
While cryptocurrencies still have a ways to go in terms of establishing a regulatory framework, this may throw investors off the space. However, there is another option through exchange-traded funds (ETFs), which can track bitcoin price movements.
As such, a price rally in bitcoin could offer investors an opportunity in ETFs, which are within a regulatory framework for safer investment. Among those to be taken into account are the ProShares Bitcoin ETF Strategy (BITO)he Valkyrie Bitcoin ETF (BTF) Strategyhe VanEck Bitcoin ETF Strategy (XBTF)and the Simplify Bitcoin PLUS Income ETF (MAXI) Strategy.
For more news, information and analysis, visit the crypto channel.
