Crypto Weekly: Was that mainly hopium? Crypto Weekly: Was that mainly hopium? Crypto Weekly: Was that mainly hopium?

Crypto Weekly: Was that mainly hopium?

Mads Eberhardt

Cryptocurrency Analyst

Summary:  Following the successful Ethereum merge last week, Ethereum has led a downward trajectory among cryptocurrencies, indicating that the price development in the past months has been driven by hopium. Despite this, the correlation between Bitcoin and S&P 500 is almost at a record high.

The market sells the news of the Ethereum merge

The second-largest cryptocurrency Ethereum successfully underwent its merge on Thursday last week, changing its consensus framework from proof-of-work to proof-of-stake. The event has been highly anticipated for years in the Ethereum community. Although the merge occurred flawlessly, market participants were liquidating Ethereum positions following the merge. In a matter of days, Ethereum tumbled by around 20% from 1,605 to 1,290 (ETHUSD), leading a downward trajectory in the crypto market, with Bitcoin plunging by around 4.5% over the same period.

The decline of particularly Ethereum suggests that the merge was remarkably hyped, leading to a “buy the rumor, sell the news”-event, as Ethereum has posted substantial price gains in the past couple of months in anticipation of the merge. In hindsight, it seems the merge was sort of hopium in times of an environment embedded in unfavorable conditions from macro and global unrest to crypto native contagion with various crypto companies that have filed for bankruptcy.

With that being said, the merge technologically limits the selling pressure of newly issued Ether, since the yearly issuance of Ether has declined by nearly 90% after the merge - from 5.4mn Ether to currently around 0.6mn Ether. To stress this, the Ethereum supply has increased by 3,600 Ether since the merge. If the merge had not occurred, the supply would instead have increased by 64,800 Ether. It is important to note that the effect of the issuance drop is not expected to be seen in the short term. Miners are still owning a noticeable amount of Ether, which they may continue to sell in the foreseeable future. In comparison, after the latest Bitcoin halving in 2020, which cut the mining reward in half, the Bitcoin price did not move by much in the next 6 months.

Crypto-equity correlations at record-highs

Yet, it is arguably not only hopium that has affected the crypto market lately. Once again we must turn our attention to the stock market, which we have done countless times this year so far. The 60-day correlation coefficient for Bitcoin and the S&P 500 is presently at above 0.7 as shown in the chart below, and it is very close to the all-time high correlation in May this year. A high correlation implies that the crypto market is behaving similarly to news on global unrest, rising interest rates, and inflation. First, this may suggest a potential relief in the crypto market is likely to be ignited by a positive sentiment shift in equities. Secondly, this means that crypto offers less diversification in a portfolio than previously.

Correlation between Bitcoin and S&P 500 - 60 day correlation coefficient. Source: Bloomberg
Bitcoin/USD - Source: Saxo Group
Ethereum/USD - Source: Saxo Group

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Trading in financial instruments carries risk, and may not be suitable for you. Past performance is not indicative of future performance. Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.