Macauley Peterson

<div id="highlights-block_d53364dddebbf7b82d4e9bb9bd5f0b6c" class="highlights">
        <ul>
                <li>The S&#038;P 500 ended the day -1% lower after initially trading up 1.5%, which has only occurred 8 times since the 2009 GFC, according to Bianco Research</li>
                <li>Bitcoin is now at its lowest point since Aug. 5, when it traded as low as $37,316 intraday</li>
            </ul>
    
</div>



<p>All major digital assets are trading lower, following a sharp decline Thursday into Friday, and <a href="https://blockworks.co/price/btc">BTC</a> is currently testing the lows at $38,150, echoing weakness in US equity markets futures. Around $750 million in long crypto derivatives positions were liquidated, according to data from <a href="https://www.coinglass.com/LiquidationData" target="_blank" rel="noreferrer noopener">Coinglass</a>.</p>



<p>The Nasdaq 100 ended Thursday down about -2.2%, and has fallen nearly 11% over the past 15 trading days, now approaching its early-October lows of around 14400.</p>



<p>The S&amp;P 500 also closed down roughly -1%, after initially rising 1.5%. <a href="https://twitter.com/biancoresearch/status/1484283297010262017">According to Jim Bianco</a> of Bianco Research, that has occurred “only 8 times since the Global Financial Crisis in 2009.”&nbsp;</p>



<p>Bitcoin&#8217;s correlation with the tech-sector has been on an uptrend since the middle of 2019 and is near its all-time peak, on a monthly timescale, of about 0.8, as measured by the correlation coefficient (a 1.0 reading would be perfectly correlated, while -1.0 would be inversely correlated).</p>



<p>Positive correlation with the Nasdaq 100 has been the predominant condition for bitcoin throughout its history, particularly since 2017, a counterpoint to the narrative of BTC as a risk-off asset more akin to gold. Gold, meanwhile, has been significantly less correlated with the Nasdaq, although most assets moved in tandem throughout the stimulus-fueled uptrend in equities after the March 2020 crash.</p>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="388" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png" alt="" class="wp-image-15826" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=50 50w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/2022-01-21-BTC-Nasdaq-correlation-1024x388.png?w=1708 1708w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Above: BTC correlation with the Nasdaq from 2013-present; Source: TradingView<br>Below: Gold correlation with the Nasdaq 2013-present<meta charset="utf-8">; Source: TradingView</figcaption></figure>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="434" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png" alt="" class="wp-image-15827" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=50 50w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-13.55.03-1024x434.png?w=1712 1712w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>



<p>“[The] market is catching a risk-off momentum due to [a] spike in supply side inflation fear as well as geopolitical concern over Russia/Ukraine situation,” William Fong, Treasurer at Australian trading firm Zerocap told Blockworks.</p>



<blockquote class="wp-block-quote">
<p><strong>“Safe haven portfolio flow has shifted from stocks, credit and cryptocurrency markets into treasury bonds today in search of risk protection.”</strong>&nbsp;</p>
</blockquote>



<p>Fong also pointed to the unwinding of bullish leveraged positions in the market for crypto derivatives. The global open interest for bitcoin — a measurement of derivatives activity — has indeed fallen to about $11.4 billion in the wake of the sell-off, down from a peak of around $13.6 billion in late December.</p>



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1019" height="482" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg" alt="" class="wp-image-15828" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg?w=1019 1019w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Screenshot-2022-01-21-at-14.04.08.jpg?w=50 50w" sizes="(max-width: 1019px) 100vw, 1019px" /><figcaption class="wp-element-caption">Global Open Interest, the total number of outstanding contracts across all exchanges; Source: KrownTrading.net</figcaption></figure>



<p>However, there is hope for bitcoin bulls. By some metrics, such as the daily <a href="https://www.investopedia.com/terms/s/stochrsi.asp">stochastic RSI</a>, both equities and bitcoin are in oversold territory. And both remain in a primary uptrend on the monthly timeframe, with higher lowers and higher highs. For bitcoin, that remains the case so long as BTC ends the month above about $35,000.</p>



<p>Some bitcoin-specific indicators such as the Net Unrealized Profit/Loss (NUPL) — comparing BTC sales at a profit with those at a loss — show similarities with the summer 2021 sell-off, which found a bottom around $32,000, after intra-week moves as low as the $29,000 area.</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr"><a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> Net Unrealized Profit/Loss (NUPL) presents the magnitude of <a href="https://twitter.com/search?q=%24BTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$BTC</a> holder unrealized profit and loss, as a proportion of the Market Cap. <br><br>NUPL is currently trading at 0.43, the lowest level of network profitability since July 2021.<br><br>Live chart: <a href="https://t.co/QlJUY5K6eW">https://t.co/QlJUY5K6eW</a> <a href="https://t.co/Zzge8fTUwZ">pic.twitter.com/Zzge8fTUwZ</a></p>&mdash; glassnode (@glassnode) <a href="https://twitter.com/glassnode/status/1484307499704807427?ref_src=twsrc%5Etfw">January 20, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>European equity markets are trading lower, with the EURO STOX 600 index down -0.68%. The S&amp;P futures market points to a similar down open for US equities, and the Nasdaq 100 futures are down about -1%.</p>




<div class="tradingview-widget-container">
  <div class="tradingview-widget-container__widget"></div>
  <div class="tradingview-widget-copyright"><a href="https://www.tradingview.com/markets/currencies/" rel="noopener" target="_blank"><span class="blue-text">Markets</span></a> by TradingView</div>
  <script type="text/javascript" src="https://s3.tradingview.com/external-embedding/embed-widget-market-overview.js" async="">
  {
  "colorTheme": "light",
  "dateRange": "1D",
  "showChart": false,
  "locale": "en",
  "largeChartUrl": "",
  "isTransparent": false,
  "showSymbolLogo": true,
  "showFloatingTooltip": false,
  "width": "100%",
  "height": "350",
  "plotLineColorGrowing": "rgba(41, 98, 255, 1)",
  "plotLineColorFalling": "rgba(41, 98, 255, 1)",
  "gridLineColor": "rgba(42, 46, 57, 0)",
  "scaleFontColor": "rgba(120, 123, 134, 1)",
  "belowLineFillColorGrowing": "rgba(41, 98, 255, 0.12)",
  "belowLineFillColorFalling": "rgba(41, 98, 255, 0.12)",
  "belowLineFillColorGrowingBottom": "rgba(41, 98, 255, 0)",
  "belowLineFillColorFallingBottom": "rgba(41, 98, 255, 0)",
  "symbolActiveColor": "rgba(41, 98, 255, 0.12)",
  "tabs": [
    {
      "title": "Markets",
      "symbols": [
        {
          "s": "INDEX:BTCUSD",
          "d": "Bitcoin"
        },
        {
          "s": "INDEX:ETHUSD",
          "d": "Ether"
        },
        {
          "s": "EUREX:FXXP1!",
          "d": "Euro STOXX 600"
        },
        {
          "s": "CME_MINI:ES1!",
          "d": "S&P 500"
        },
        {
          "s": "CME_MINI:NQ1!",
          "d": "Nasdaq 100"
        }
      ],
      "originalTitle": "Forex"
    }
  ]
}
  </script>
</div>




<p><em>Sebastian Sinclair contributed reporting.</em></p>



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<p><strong>Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.</strong></p>