When the Federal Reserve lifted interest rates again last week by 25 bps, Bitcoin (BTC-USD) and Ethereum (ETH-USD) fell. It snapped back slightly, unwilling to correlate positively with stock markets again.
In the near term, the stock market to Bitcoin correlation decoupled. In the weeks and months ahead, Bitcoin may move with the stock market direction again. The link between traditional banks and the crypto network is weakening.
Liquidity is drying up after Silvergate’s SEN and Signature’s Signet network closed in early March. This will give the biggest crypto holders more influence on day-to-day pricing. Customers are worse off when spreads widen. The higher volatility could lead to Bitcoin prices following stock markets again.
Bullishness for various cryptocurrencies may follow the market. Most cryptocurrencies in the last seven days traded flat or lower. Tether, BNB, and Polygon are among those trading lower on the week. XRP, Cardano, and (LTC) rose. Looking beyond the stock market and crypto correlation, Binance’s temporary suspension of trading, deposits, and withdrawals did not cause a panic. The suspension was due to a bug in the matching engine.
Your Takeaway
The market volumes for Bitcoin and Ethereum need to improve. The low liquidity will encourage pricing inefficiencies. Customers could lose out on higher slippage and wider pricing spreads.
