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Bitcoin (BTC) Trading in Tandem with Tech Stocks — TradingView News
Bitcoin, the leading cryptocurrency, is once again trading in lockstep with technology stocks, according to a Friday report from Bloomberg.
The 90-day correlation between the flagship cryptocurrency and the tech-heavy Nasdaq 100 index reached 0.46, the highest level in nearly a year.
The growing correlation undermines the portfolio diversification narrative often pushed by Bitcoin advocates.
Earlier this year, Bitcoin’s correlation with stocks dropped significantly. In fact, according to Fidelity’s Jurrien Timmer, it turned negative in April.
The correlation between the largest cryptocurrency and stocks tends to fluctuate based on macrofinancial conditions. For example, it went up to 0.50 in May 2022. It also skyrocketed in 2020 during the QE era.
Earlier this week, the averages of the major US stock markets managed to reach record highs after the most recent CPI report showed a decline in inflation in the United States.
Bitcoin also rebounded, regaining the coveted $67,000 level and reaching its highest price since early April.
The latest inflation data has revived bullish sentiment as Wall Street believes the US Federal Reserve may end up cutting rates several times this year. Lower financing costs would be extremely beneficial for risky assets such as stocks and cryptocurrencies.
However, the Fed has yet to rein in inflation, which could suggest that this investor optimism may be premature.
This morning, US Federal Reserve Governor Michelle Bowman predicted that inflation would remain high “for some time.” However, Bowman stressed that she would be willing to raise rates if necessary.