Ethereum Whale Trades Climb as S&P 500 Correlation Continues
Over time, the crypto market has had a close relationship with the stock market. Ethereum, the second-largest cryptocurrency, rose in line with US stocks for the first time in February. As a result, the token’s 40-day correlation coefficient with the S&P 500 reached 0.65.
Despite the damper anxious investors put on price activity last week, the price of Ethereum (ETH) is poised to rise over the weekend. While trading volume has increased over the past week and should therefore have resulted in more consistent fluctuations, price responsiveness has been impacted by geopolitical news, earnings, and stock market backlash.
Ethereum Price Witnesses Turmoil
Ethereum price has had a grueling week for investors and traders alike, with wild swings in response to earnings, geopolitical events, and investors flipping from risk to risk like a switch. But with volatility comes opportunity, and as all of these events wind down towards the weekend, the bulls will have the playing field to themselves and can drive the price all the way up to $3,500 if they choose the good entry levels. Expect the RSI to rally back above 50 again, with plenty of room before trading into the overbought territory.
According to statistics from Santiment, a crypto market behavior analysis tool, Ethereum has a strong (+ve) correlation with the S&P 500 index. 500, the price of ETH increased by 3%.
April 29 tweet added,
“Helped by a +1.8% day in the SP500, Ethereum pulled back above $2,930 with its close correlation to stock markets.
Now, as the chart above shows, ETH’s strongest buyers, the whales, have retaliated by buying additional ETH. That day, the number of whale transactions worth more than $100,000 increased significantly.
In four hours, 1,451 such transactions were documented. The jump, according to Santiment, suggested that major stakeholders were paying attention to the price increase.
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Is Equity Market Correlation Good for ETH?
This was not the first time that ETH showed signs of a developing relationship with the stock market. The two sank together on March 31, as reported three weeks earlier, but started to climb again after April 1. Ether has surged in tandem with the SP500 since mid-March.
Every positive situation in the crypto-verse comes with a negative counterpart. It is, after all, a fact. This scenario is no exception. Crypto’s strong association with stocks, in particular, could work wonders. On the other hand, different reputable entities have censored warning situations for the same.
ETH/USD has remained below $3k. Source: TradingView
Arthur Hayes, the former CEO of BitMex, raised some warning signs about this link in this case. Surprisingly, the stock market appears to be heading for a huge decline through 2022 as the Federal Reserve tightens monetary policy to fight inflation.
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Featured image from Pixabay, Santiment, chart from TradingView.com