Market Insights: The Complex Relationship Between Bitcoin and Financial Markets

In the financial markets, maintaining a sense of awe and independent thinking is crucial. Whether in traditional markets or the cryptocurrency space, there are uncertainties and risks everywhere. As investors, we need to pay attention to market dynamics and think about how to profit amid volatility, rather than getting caught up in the intrinsic properties of certain assets.

Recently, the financial markets have been volatile, with traditional safe-haven asset gold dropping more than 10%, highlighting that there is no absolute safe haven during extreme panic. Bitcoin was once seen as a de-correlated asset, but during the global financial crisis, it exhibited a high correlation with the stock market. When the S&P 500 experienced a rare plunge, Bitcoin also did not escape unscathed. Following the stock market rebound, the price of Bitcoin also rose back to previous support levels.

In the past week, Bitcoin has reacted significantly to several major events, including the Federal Reserve's interest rate cut and travel bans. This indicates that the connection between Bitcoin and the macroeconomic environment is strengthening.

The MVRV ( market value to realized value ratio ) indicator shows that Bitcoin is currently at a historical low. This indicator reflects market valuation levels by comparing market value and total investor cost. An MVRV below 1 means the current price is below the average cost of investors, which may indicate a good buying opportunity. However, it is important to note that a high MVRV does not necessarily mean that the price will rise immediately; instead, it may trigger profit-taking.

Although the current market environment is full of challenges, opportunities and risks coexist. Staying vigilant and being prepared is essential to seize opportunities in the market. Regardless of how the market changes, rational analysis and independent thinking are always the keys to successful investment.