US Exchanges and the Price of BTC and ETH

In recent years, a fairly close and continuous correlation has been observed between the performance of the major indices of the US stock exchanges and that of the price of bitcoin and ethereum, and the crypto markets in general. 

This correlation seems to have temporarily broken down. 

It must be said that in the long term, breaks in this correlation have been observed on other occasions, so this is not the first time. But these days, there is another type of correlation that is decidedly curious.

Bitcoin and Ethereum price performance after 19th April

We examine what happened after the 19th, looking in particular at the performance of the S&P500 index and the price of bitcoin. 

After the US stock markets closed on the 19th, the price of bitcoin fell. The following day, the S&P500 index opened lower, almost as if following Bitcoin’s earlier decline, but on Friday the 21st the first real break occurred. 

In fact, the S&P500 index did not move significantly that day, while the price of BTC fell. 

Over the weekend, with the traditional exchanges closed, the price of BTC remained low and the following Monday the lateralisation continued for both. 

On Tuesday 25th and Wednesday 26th April, however, there was another apparent discrepancy: while the US stock exchanges were posting significant losses, the price of bitcoin rallied, recovering all the losses accumulated since the 19th. 

It should be added, however, that over the next few days, as the price of BTC moved sideways, the S&P500 index rebounded and closed the apparent gap it had accumulated against Bitcoin.

Also on Monday 1st May, as the exchanges reopened, Bitcoin’s price action diverged from that of the US exchanges, with the latter moving sideways as BTC fell.

The last three sessions

What is more interesting is what happened in the last three sessions. 

On Tuesday 2 May, the S6P500 started the session with a sharp decline. Shortly afterwards, the price of Bitcoin began to rise. There was then a small rebound on the exchanges, with BTC merely moving sideways. 

Yesterday, nothing much happened until Powell’s press conference, but then the US stock markets started to fall so much that it looked like they would take Bitcoin with them. 

Instead, not only did the price of BTC lose very little at that point, but as soon as the US exchanges closed, it bounced back above $29,000. 

Today, it seemed to be lateralising and instead fell back below $29,000 as the exchanges opened lower. 

In other words, over the past two days, the price of bitcoin has fallen when the US exchanges were open, and it has fallen while rising or lateralising when the exchanges were closed. And three days ago, instead, BTC went up as the US exchanges went down. 

So it seems that the US markets in recent days are hurting the price of bitcoin, which does well when the US exchanges are closed.

The performance of Ethereum

Ethereum, on the other hand, is slavishly following BTC. 

The only significant differences were before the Shapella update on 12 April, but from then on it was bitcoin that led the crypto markets again. 

On the first of May, the price of ETH fell below $1,900 and then almost reached $1,800. In the following days, however, it made a small recovery, similar to that of bitcoin, which took its price back above $1,910 yesterday. However, it was back below $1,890 when the US markets opened. 

There is one difference though. 

While the current BTC price of just under $29,000 is well above where it was on 21st April, the price of Ethereum is more or less back at that level.

This could be due to the fact that BTC is partly seen as a possible self-custodial alternative to savings held in bank accounts, while ETH is probably not.

Indeed, the crisis in the US banking sector could lead some people to buy bitcoin in order to hold it in a non-custodial wallet for the long term. 

In recent weeks the price of ETH has therefore been a little less volatile than that of BTC, as bitcoin enters the strategies of those who wish to diversify their savings, while Ethereum may not yet.

The US markets and the current relationship with the price of Bitcoin and Ethereum

The US markets, which also dominate the cryptocurrency markets, are currently experiencing a certain amount of uncertainty, mainly due to some not very good data coming out of the economy in the face of continued basically positive messages from the authorities. 

To be honest, investors do not seem to be panicking, but at the same time they do not seem to be taking the authorities’ essentially good statements at face value. 

At the moment it is difficult to understand which way they want to go, although they have clearly been on the losing side in recent days. 

Having risen in recent days, they have now fallen back to the levels seen at the end of April, not far from those seen in March. 

It is possible, however, that this phase of apparent lateralisation, which has been underway since the second half of March, will break at some point, but at the moment it is not at all easy to predict in which direction it will go.