- Bitcoin price trades around the $26,000 level after undoing Grayscale gains.
- The US SEC delays major spot BTC ETF applications, leaving investors on edge until the next deadline in October.
- The spike in Bitcoin correlation to the DJIA could reintroduce volatility to crypto markets during Friday’s Nonfarm Payrolls event.
- The NFP report came in at 179,000, slightly higher than forecasted number of 170,000.
Bitcoin price undid Grayscale gains after the US Securities and Exchange Commission (SEC) has decided to postpone its spot Bitcoin Exchange-Traded Fund (ETF) decision on eight applications. BTC slid from $28,000 down to $26,000, where it currently trades.
In addition to the SEC’s involvement, Bitcoin’s correlation to the stock market has increased considerably, leaving it at the mercy of the Greenback and the macroeconomic drivers that move traditional markets.
Bitcoin correlation to the US stock market gushes higher
Bitcoin’s correlation with the US stock market shot up after the COVID-19 crash in March 2020. Since then, BTC has been sensitive to the US Federal Reserve’s decisions on macroeconomic policies.
After being consistently high in the first half of 2023, the correlation started to decline in April, hit a low point in June and then reached a lower low in August. However, correlation has climbed again with no pullbacks over the last month. Currently, the correlation with the Dow Jones Industrial Average (DJIA) has hit early 2021 levels of 0.92. With S&P 500 and Nasdaq 100, the correlation is at a lower level, around 0.69 and 0.53, respectively.
A careful observation shows that the downtrend in correlation hit a bottom and began to bounce back in the second week of June, when the BlackRock spot Bitcoin ETF was filed. One could say that the correlation ebbs and flows, and the recent spike is likely to remain higher throughout the third quarter and into the fourth quarter of 2023.
BTC correlation to S&P 500, Nasdaq 100 & DJIA
The US NFP is the next key event to watch
Bitcoin price is highly sensitive to macroeconomic policies from the Fed. And the Fed pays close attention to labor market indicators to gauge inflation trends, with the upcoming Nonfarm Payrolls (NFP) taking center stage. The payrolls came in at 179,000 which is higher than the forecast of 170,000. But since the deviation is not huge, the markets are unlikely to be swayed by the jobs report.
Regardless, investors need to note that Fed Chair Jerome Powell has already hinted that another rate hike could be a possibility should the data suggest a slowdown in inflation. So, investors need to wait until September 20 to know if the Fed will raise interest or pause. At the time of writing, however, the CME FedWatch Tool shows that there is a 93% chance that the Fed does not increase interest rates.
Bitcoin price nosedives after SEC delays ETF decision
Bitcoin price rallied nearly 8% after Grayscale’s win against the SEC, but this uptick was soon undone as the regulator delayed the ETF decision on August 31. Investors are now waiting with bated breath for the next deadline, which is in the second week of October.
NEXT DATES TO WATCH:
Middle of October are the next major days to watch. Namely October 16th. (& @GlobalXETFs‘ Oct 7)
— James Seyffart (@JSeyff) August 31, 2023
As seen in the Bitcoin price chart below, the delay from the SEC has pushed the pioneer crypto down sharply. In case,
BTC/USDT 4-hour chart