Bitcoin (BTC/USD) continued its steady run on Friday, gaining another 2% to break $260- its highest level in 2 months.
Bitcoin had not traded above $260 since prior to that fateful August 18, when it shed 13% amid the onset of turmoil in global stock markets.
Interestingly, bitcoin has shown a closer correlation with global equity markets during the last 3 months than in the past. Bitcoin fell below $200 at the same time as the climax of the global equity sell-off on August 25. The Dow Jones Industrial Average closed at 15,666- a 19-month low- capping a 6-day losing streak during which it lost nearly 11%. The day before, the index was down by an unprecedented 1,100 points at one point.
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On August 26, bitcoin rebounded strongly with global markets, gaining 15% and erasing all of its losses from the previous two days.
Its current October rally has also correlated with equity markets, which like bitcoin, are flirting with 2-month highs.
If there is a genuine correlation, it may relate to investor appetite for riskier assets. Despite contempt from passionate members of the Bitcoin community, the US dollar is generally perceived as a safe-haven currency. Thus, recent gyrations in the bitcoin price can often be attributed to the relative value of dollar value in which it is denominated. Recent weakness in the dollar has also been attributed to sentiment that the Fed will not raise interest rates any time soon.
Like with yesterday’s advance, litecoin (LTC/USD) has once again failed to keep pace. During the past 24 hours, it has barely budged from $3.07. With bitcoin’s advance, the LTC/BTC rate has declined once again, challenging early September lows near 0.0115.