The digital asset topped $90,000 on Wednesday afternoon, mirroring stocks that posted similarly strong gains.
Pre-holiday excitement: What’s driving Bitcoin’s recent rally?
Cypherpunks and bearded libertarians were once the archetypes of Bitcoin. But after the first group of Bitcoin exchange-traded funds (ETFs) were approved last year, the new avatar may be a Wall Street executive in a navy blue suit. The ETF currently holds over 1.5 million BTC, representing nearly 7.2% of its total supply. The next largest group of holders are public companies. This is important because it may explain why Bitcoin’s rise to $90,000 on Wednesday was frenzied following a stock market rally.
read more: Will Bitcoin cross $100,000 again by Christmas?
The correlation between Bitcoin and the S&P 500 rose to 0.87 on Wednesday, according to NewHedge data. In other words, the two asset classes were essentially moving in lockstep. So when stocks rose on the eve of Thanksgiving, BTC followed suit, fueled by more AI hype. Cloud infrastructure giant Oracle, which signed a $300 billion deal with OpenAI in September, led the rally in big tech stocks. Much of that comes from Deutsche Bank analyst Brad Zelnick, who wrote an article enthusiastically praising the company’s profit potential from the deal.
(Newhedge data shows the correlation between Bitcoin and stocks has jumped to 0.87/Newhedge)
“OpenAI’s backlog represents solid ROI business,” Zelnick wrote. “And it demonstrates Oracle’s leadership in deploying AI cloud infrastructure at scale.”
Oracle rose 4%, while the S&P 500, NASDAQ, and Dow rose 0.77%, 0.86%, and 0.80%, respectively. Bitcoin rose 4% this week, coinciding with Turkey Day, topping $90,000 for the first time. To be clear, Bitcoin does not always have a close correlation with stocks. It is often disconnected. However, as institutional money flows into the ecosystem, cryptocurrencies will inevitably bow to Wall Street and only mirror the rise and fall of traditional markets.
Overview of market indicators
According to Coinmarketcap, Bitcoin rose 4.06% on the day and was trading at $89,872.10 at the time of reporting. The digital asset also gained 1.21% on a weekly basis, fluctuating between $86,171.48 and $90,389.93 in the past 24 hours.
(BTC Price/Trading View)
The daily trading volume was almost flat at $65 billion, and the market capitalization was $1.79 trillion. Bitcoin’s dominance increased by 0.41% to 58.75% as the cryptocurrency regained a smaller portion of market share from smaller coins.
(BTC Dominance / Trading View)
Total Bitcoin futures open interest rose 2.24% to $60.52 billion, after falling to $59 billion on Tuesday, according to Coinglass data. As of this writing, liquidations have increased slightly to $119 million. Short sellers lost $80.58 million in margin, while long investors were mostly exempt, with only $19.61 million liquidated.
Frequently asked questions ⚡
- Why did Bitcoin rise above $90,000 before Thanksgiving?
That’s because US stocks rebounded sharply on Wednesday, and the strong correlation between Bitcoin and stocks pushed Bitcoin higher. - How did the stock market rally affect Bitcoin?
Major indexes rose as Oracle-led AI optimism rose again. - How much correlation is there between Bitcoin and traditional markets right now?
According to data from Newhedge, the correlation with the S&P 500 is 0.87, meaning the two are moving roughly in lockstep. - Will Bitcoin continue to react to Wall Street movements?
As ETF and institutional holdings increase, Bitcoin’s price is increasingly likely to reflect broader market sentiment.
