Bitcoin’s correlation to Big Tech near lowest since 2021
Bitcoin has been moving less in tandem with tech stocks as sentiment around equities and cryptocurrencies diverges.
The world’s largest cryptocurrency has been stuck below the $27,000 level this week, while the tech-heavy Nasdaq 100 has climbed 3.5%.
The 40-day correlation coefficient for Bitcoin and the tech gauge slid to 0.19 on Friday, the lowest since April 25.
A reading of 1 implies assets are moving in lockstep and minus 1 signifies the opposite.
Before April, the lowest reading was in November 2021.
Bitcoin and equities — particularly growth stocks — had been tied at the hip for a while as investor appetite for both boomed in an era of low interest rates.
That has since changed since the start of the year, as uncertainty around the Federal Reserve’s path of rate hikes and the bank collapses in March prompted investors in each market to react differently.
There has been that decoupling, with the Nasdaq 100 charging higher while Bitcoin has been trading lackluster,” said Fiona Cincotta, senior market analyst at City Index.
Bitcoin is in that period of consolidation.”
To Stephane Ouellette, chief executive of FRNT Financial Inc., an institutional platform focused on digital assets, the breaking down of this correlation is to be expected as Bitcoin is still relatively new to many investors.
The self-custody element of Bitcoin helped it in the throes of the bank collapses, he said.
We’ve seen days when there have been negative headlines around banking cause panic in equity markets but benefit Bitcoin,” he said.
Correlations emerge from consensus of market participants around how certain assets behave under a set of conditions, he added.
By:ET
