Bitcoin price more correlated to FTX developments than macro events: Research
According to the study, the FTX crash and related events had more of an impact on the rise or fall in the price of bitcoin (BTC) during the fourth quarter compared to macroeconomic events such as rate hikes.
In the State of Bitcoin Q4 2022 report published On February 10, Messari analysts Sami Kassab and Chris Kollar found that the collapse of the exchange caused the price of bitcoin to drop by 25%.
How #Bitcoin fares in the fourth quarter 22′ after the unfavorable macroeconomic and crypto environment?
+FTX Crash Causes 25% Swing Affecting Centralized Objects/Exchange Balance
+Annual output down 64% after halving trend
+ Active addresses increased by 2% QoQ
Full report pic.twitter.com/6hhSqNEVbr
— Messari (@MessariCrypto) February 10, 2023
The report highlights that changes in the federal funds rate had a much smaller impact on the price of bitcoin, even after the 75 and 50 basis points hikes.
He also pointed out that the number of active wallets increased by 2% compared to the previous quarter as bitcoin was moved from centralized exchanges to standalone wallets during the period.
Study paper from the Federal Reserve Bank of New York earlier this week came to a similar conclusion.
The February 8 article looked at the relationship between macroeconomic news and the price of bitcoin and found that inflation was the only variable that had a significant impact on the price of bitcoin.
“Unlike other asset classes, Bitcoin is orthogonal to monetary and macroeconomic news.” – New York Fed
Even the Fed sees bitcoin becoming less sensitive to macro conditions as its liquidity increases.
Maturation from an asset with speculative risk to an underlying monetary commodity is underway https://t.co/9ACRAg78Hi
— Joe Consorti ⚡ (@JoeConsorti) February 8, 2023
The authors of the article, analysts Gianluca Benigo and Carlo Rosa, collected data for the period from January 2017 to December 2022, studying the impact of macroeconomic news on various asset classes.
The study took into account many categories of macroeconomic news, including inflation, the real economy, monetary policy news and forecasts.
Bitcoin price hits 2-week low amid warning that $22.5k loss means new fall
The authors expressed surprise at their findings, concluding:
“The key result is that, unlike other US asset classes, Bitcoin is orthogonal to monetary and macroeconomic news. This discrepancy is puzzling, as unexpected changes in discount rates should in principle affect the price of Bitcoin, even if Bitcoin is considered a purely speculative asset.”
Despite the US Federal Reserve continuing to raise rates at a record pace, Bitcoin had a stellar start for 2023, rising by just under a third from $16,557 to $21,888. according to at Yahoo Finance.
Credit : cointelegraph.com