Following Glassnode’s latest newsletter, there remains a high correlation between Bitcoin and risky assets. Hence, if there is a fluctuation in the US stock market, it will also have a significant impact on the price of BTC.
“Our analysis continues to suggest that this renewed sensitivity to market risks and a higher likelihood of stronger drawdowns has not been due to a lack of confidence in [BTC] but rather due to a charged macroeconomic environment.”
The macroeconomic landscape appears shaky after the Federal Reserve announced a $95 billion monthly tapering of its balance sheet in an effort to fight inflation. There are also concerns that Russia’s military aggression could expand and target territories of the European Union.
The risky environment has led to over $100 million flowing out the crypto markets during the past week, with BTC bearing the brunt of the outflows.
“Zooming into the crypto space, last week saw $134 million in fund outflows, marking the second-highest weekly outflows in 2022. Solana received $3.7 million in inflows, and altcoins (multi-asset) recorded $5 million in inflows, while a massive $131 million flowed out of Bitcoin.”
Despite the bleak macroeconomic picture, Allemann believes BTC is still showing signs of on-chain strength. According to Allemann, BTC investors are withdrawing Bitcoin from cryptocurrency exchanges at an unprecedented rate, indicating that a bottom may be in sight.
“Bitcoin exchange net position change shows potential bottoming and next leg up. Less supply on exchanges leads to subsiding selling pressure.”