The return of positive correlation between cryptocurrencies and Nasdaq suggests digital assets investors have moved past the FTX contagion fears. Reports godbole17.
The correlation between the crypto market and the tech-heavy Nasdaq equity index has turned positive, indicating the digital asset investors' renewed focus on risk appetite on Wall Street.
Speculation that Federal Reserve would resort to rate cuts later this year is perhaps behind the renewed correlation between the liquidity-addicted risk assets. The long-held positive relationship had crumbled in November, thanks to theof Sam Bankman Fried's FTX exchange that saw crypto investors dump their tokens despite the risk reset on Wall Street.
The renewed positive correlation implies increased sensitivity of cryptocurrencies to macroeconomic data releases like the U.S. consumer price index , which injects volatility into stock markets. The CPI days were among the most volatile for U.S. stocks last year,Tuesday's U.S. CPI report from the Bureau of Labor Statistics is likely to show the annualized inflation declined to 6.2% in January from December's 6.5%, according to Reuters estimates sourced from FXStreet.
Per Andreas Steno Larsen, founder and CEO of Steno Research, the CPI data is likely to come in softer than expected. That would bolster the Fed rate cut hopes.
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