Over time, the crypto market has maintained a close relationship with the stock market. Ethereum, the second largest cryptocurrency, rose by leaps and bounds with US stocks for the first time in February. As a result, the token’s correlation coefficient reached 40 days with S&C’s. P 500 to 0.65.
Despite the investors’ nervousness over price activity last week, the price of Ethereum (ETH) is expected to rise over the weekend. Although volume has increased over the past week and thus should have resulted in more steady volatility, the price response has been affected by geopolitical news, earnings and stock market leaflets.
Ethereum price in turmoil
Ethereum price has had a stressful week for investors and traders, with huge swings in response to earnings and geopolitical events and investors shifting from risky to risk-off like a light switch. But with volatility comes opportunity, and with all these events coming to an end this weekend, the bulls will have a playground to themselves and can push the price up to $3500 if they choose the right entry levels. We expect the RSI to rise above 50 again, with plenty of room to go before trading in the overbought territory.
According to Statistics Santiment, a tool for analyzing the behavior of the crypto market, Ethereum has a strong (+ve) correlation with the S&P index. P 500. After a 1.8 percent drop in the S&P index numbers; P500, the price of ETH increased by 3%.
Tweet from April 29 additive,
“Buoyed by +1.8% on the day in the SP500, Ethereum jumped again above $2,930 with its tight correlation to the equity markets.”
Now, as shown in the above chart, the strongest ETH buyer, whales, has retaliated by buying additional ETH. On that day, the number of whale transactions worth over $100,000 increased exponentially.
In a four-hour period, 1,451 such transactions were documented. The jump, according to Santiment, indicates that key stakeholders were paying attention to an increase in prices.
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Is the stock market correlation good for ETH?
This is not the first time that ETH has shown signs of a developing relationship with the stock market. The two sank together on March 31, reportedly three weeks earlier, but began climbing again after April 1. Ether has risen along with the SP500 since mid-March.
Each positive case in the coded verse is accompanied by a negative counterpart. This is, after all, a fact. This scenario is no exception. Crypto’s strong association with stocks, in particular, may work wonders. On the other hand, various reputable entities have monitored cautionary stances for themselves.
ETH/USD has remained below $3k. Source: TradingView
Arthur Hayes, former CEO of BitMex, raised warning signs about this link in this case. Surprisingly enough, the stock market appears to be heading for a significant decline into 2022 as the Federal Reserve tightens monetary policy to fight inflation.
Featured image from Pixabay, Santiment, chart from TradingView.com