Eurozone PMI data falls short of market expectations / Is Bitcoin a safe-haven currency again?
Eurozone PMI data falls short of market expectations
Rising energy prices have pushed the euro zone business activity index to a near two-year low. Everyone fears that Europe will fall into a deep recession. Reuters and CNBC reported that the S&P Global Eurozone Composite Purchasing Managers Index (PMI) was 47.1 in October, lower than 48.1 in September and lower than market estimates of 47.5. The composite PMI is demarcated at 50, below 50 means shrinking. The euro zone composite PMI has been below 50 for four consecutive months, and this month's data hit a new low since November 2020. In addition, the local inflation showed no sign of slowing down, and the output and input indexes of the euro area service industry were still close to record highs.
Is Bitcoin a safe-haven currency again?
Bank of America believes that bitcoin’s now-higher correlation with gold could signal recent market volatility that has investors once again seeing bitcoin as a safe haven.
Decrypt and other foreign media reported that Bank of America Securities analysts Alkesh Shah and Andrew Moss recently published a research report pointing out that the positive correlation between Bitcoin and the S&P 500 (SPX) and Nasdaq 100 (QQQ) is getting lower and lower. Gold (XAU) correlations rose sharply, however, suggesting that investors may be looking at bitcoin as a relatively safe haven at a time when the general economic environment is still fraught with uncertainty and stocks have not yet bottomed.
Bank of America reports that Bitcoin currently has a 40-day correlation to gold of around 0.5, up from near zero in mid-August. Although the correlation coefficient between Bitcoin and the S&P 500 and Nasdaq 100 is still 0.69 and 0.72, it is lower than the historical peak a few months ago and has gradually slowed down.
The relationship between bitcoin and gold has long been used to gauge whether investors believe bitcoin can hold value. From June 2021 to February 2022, the price trends of Bitcoin and gold were closely related, but the correlation coefficient in March 2022 turned negative. If the correlation coefficient between the two is positive, it means that the price trend is similar, and vice versa.
