Bitcoin (BTC-USD) bounces back into positive territory as risk assets erase some earlier losses in a choppy trading day.
Earlier on Monday, bitcoin (BTC-USD) reached as low as $32.8K per token, marking its lowest level seen since July, now changing hands just under $36K.
Major U.S. stock market indices like the Dow Jones (DJI)-1.9%, S&P 500 (SP500)-2.1% and Nasdaq (COMP.IND)-2.1%, also extend losses from last week's correction. Stocks and bitcoin appear to be trading closely together as both asset classes rebound within a broader decline.
Looking at the relatively strong correlation between bitcoin (BTC-USD) and the S&P, "crypto can be viewed as a leading barometer of global liquidity as it's the most speculative of all the risky asset classes. It has been leading S&P in both directions (with some noise obv, not perfect)," Spectra Markets President Brent Donnelly writes in a Twitter post.
Donnelly makes a compelling point as bitcoin (BTC-USD) peaked at $69.4K in mid-Nov. 2021, while the S&P (SP500) only peaked in the beginning of January. Concentrating Bitcoin's tie-in with just small cap stocks, both asset classes have a 93% correlation on the weekly chart, NorthmanTrader.com Founder Sven Henrich wrote in a Twitter post on Jan. 22. This implies that bitcoin (BTC-USD) trades similar to growth-oriented risk assets.
Avalanche (AVAX-USD+0.2%), cosmos, wrapped bitcoin (WBTC-USD+3.3%), crypto.com coin (CRO-USD+0.3%) and litecoin (LTC-USD+0.0%) also jump back into positive territory in the past 24 hours.
Crypto-related stocks that are gaining some upside momentum include: MGT Capital Investment (OTCQB:MGTI+2.7%), Overstock.com (OSTK+4.4%), Ebang International (EBON+4.4%), Codebase Ventures (OTCQB:BKLLF+6.3%) and Soluna (SLNH-0.6%).
Note that ethereum (ETH-USD-0.9%), the second largest digital coin by market cap, is still trading in net negative territory on Monday.