Bitcoin is having a tough week right now, the cryptocurrency is in a state of correction and has already lost more than $10,000 from its historical peak.
The current correlation coefficient of digital gold and the S&P 500 is 0.3, which is a record for the year. Bitcoin also continues to grow if the stock shows an upward movement.
The coefficient (1) means that stocks and bitcoin are moving synchronously, and (-1) means that assets are moving in different directions.
Many crypto enthusiasts believe that digital assets and bitcoin are very closely related and are a special protective class that can act against inflation.
Many high-tech companies suffered heavy losses at the beginning of the week. On Monday, companies with a very high price in the field of high technology suffered losses, including companies whose growth expectations were pushed into the future.
Bitcoin is losing almost 7% during Monday's session, and in two weeks digital gold has fallen by almost 20%. Today, prices have stabilized, while the digital token has gained about 2%, to 57,455 US dollars.
Many Wall Street analysts have supported the use of bitcoin as a hedge asset against this trend.
Bloomberg Economics economists have stated in their latest calculations that about half of bitcoin's recent earnings can be attributed to investor fears, fears of impending large-scale inflation, and the other half to the abundance of the market and dynamic trading.
However, many analysts believe that bitcoin has not existed long enough, and has not proven itself to be a dominant asset that protects against inflation.
Duke University professor Cam Harvey is sure that bitcoin is like a speculative and highly volatile asset that is subject to periodic failures.
Many bitcoin movements depend on various short-term factors. It is very difficult to predict what could be the catalyst for bitcoin's growth, inflation or technological progress.
The material has been provided by InstaForex Company - www.instaforex.com