The ‘Correlation-1’ Effect: Bitcoin and Stocks Fall in Tandem

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Bitcoin’s sharp sell-off driven by ‘Correlation-1’ event impacting global markets.
On-chain data reveals significant stress among short-term Bitcoin holders.
Spot price finds support, but a break below key levels could signal a bear market.

The stock and crypto markets experienced significant volatility in the first week of August, triggered by a “correlation-1” event, resulting in a major sell-off. Bitcoin (BTC) witnessed its steepest price drop of the cycle, sparking a cautious sentiment among short-term holders.

On August 5th, global markets dipped sharply amid the unwinding of the yen carry trade and fears of a recession, which boosted US treasuries. As a result, Bitcoin’s price plummeted by 32% from its all-time high – a record in the current cycle.

The Mayer Multiple, which compares the current Bitcoin price to the 200-day moving average (200DMA), illustrates the severity of this price contraction. With the current Mayer Multiple at 0.88, Bitcoin is at its lowest point since the FTX collapse in late 2022.

Furthermore, Glassnode, the on-chain market intelligence platform, provided valuable insights into the impact of the recent sell-off. Data show…

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