Advertisement
AD

Main navigation

Bitcoin's Break from NASDAQ Rally: Why This Matters

Advertisement
Thu, 1/06/2023 - 18:34
Bitcoin's Break from NASDAQ Rally: Why This Matters
Cover image via stock.adobe.com
Read U.TODAY on
Google News

Bitcoin's correlation with the Nasdaq 100, a benchmark index composed primarily of tech stocks, has sharply declined, signaling a potential turning point for the cryptocurrency.

Advertisement

The 30-day correlation coefficient, which measures how closely the two assets' price movements are linked, has fallen to around 0.2, down from 0.8 a year ago. This suggests that Bitcoin's price moves are now less aligned with those of tech stocks. According to Stephane Ouellette, CEO of institutional digital asset platform FRNT Financial Inc., the changing correlation is likely a result of evolving investment strategies and increasing adoption of digital assets.

The change in correlation coincides with Bitcoin's first monthly decline in 2023, while the Nasdaq 100 enjoyed a nearly 8% boost, largely thanks to heightened interest in artificial intelligence.

This divergence illustrates a significant decrease in the correlation between Bitcoin and tech stocks compared to the previous year. This shift might bring a measure of idiosyncratic risk back to the cryptocurrency market. However, some experts, such as Ouellette, speculate that in the long term, this detachment might be beneficial for digital assets, allowing their performance to be less influenced by the broader tech sector.

Related
Here's How Much SHIB, BTC and ETH Gate.io Holds
Notably, the "Magnificent Seven," a group of technology and chip-maker stocks, outperformed the rest of the market in May, driving the Nasdaq Composite Index to outstrip the Dow Jones Industrial Average by 9.3 percentage points. The surge was fueled by investor interest in tech shares, particularly those involved in the artificial intelligence trend, and fears of a potential U.S. government default and looming recession that may negatively impact the broader market.

In a recent interview with CNBC, Mike Novogratz, CEO of Galaxy Digital, commented on the state of cryptocurrencies, describing the current market as "lackadaisical." He attributed this relative calm to a decrease in institutional enthusiasm, despite sustained retail interest. Novogratz suggested that the vitality of the crypto market partly depends on institutional players, whose current participation seems to be diminishing.

Bitcoin's price currently hovers around $27,000, marking a significant downturn from its highs, and highlighting Novogratz's point about the lack of institutional enthusiasm.

Advertisement
TopCryptoNewsinYourMailbox
TopCryptoNewsinYourMailbox
Advertisement

Latest Press Releases

Our social media
There's a lot to see there, too

Popular articles

Advertisement
AD