Tech
Bitcoin’s Correlation With Tech Stocks Is At Its Highest Since August 2023: Bloomberg ⋆ ZyCrypto
According to Bloomberg market researcher Maria Torres, Bitcoin’s correlation with technology stocks has reached a new nine-month high. This is interesting to note since, in general, the largest cryptocurrency by market capitalization is often correlated with gold and the stock market in general, but not technology stocks. This gives new life to the assumption that Bitcoin will soon become a fundamental growth asset, like technology stocks.
Bitcoin-Nasdaq 100 Correlation
According to Torres, the correlation coefficient between Bitcoin and the Nasaq-100 (the main index of technology stocks) reached a high of 0.46. A coefficient of 1 means that the two asset classes move in sync with each other, while a coefficient of -1 means that they behave oppositely to each other. So, we are heavily skewed towards a correlation over the last eight months or so, with a coefficient close to 0.5.
This is the highest level since August last year. Bitcoin has risen more than 250% since August, reaching $73,000 at one point this year. Technology stocks also performed very well, with beneficiaries of the AI revolution such as OpenAI and Nvidia leading the way.
Is Bitcoin becoming a growing asset in the mainstream market?
Over the years, Bitcoin has been criticized by regulators and opponents due to its volatile nature, but has been praised by supporters as a means of strong financial growth. The correlation with technology stocks shows that the market is ready to see the leading digital currency as a growth asset similar to the latter. The success of spot exchange-traded funds (ETFs). it significantly changed the game of Bitcoin and brought it to prominence.
According to Joshua Lim, co-founder of trading firm Arbelos Markets:
“People are refocusing on cryptocurrencies as a growth asset or as an asset that represents network value…, on its ability as a technology and value transfer mechanism, and that means it will be more correlated to other assets that are also pretty much growing like the Nasdaq, tech stocks, that kind of thing.”
However, this does not please Bitcoin supporters, who see BTC as an independent asset that is not affected by action in the rest of the market. They see him as an outsider who is not influenced by government policy and markets.
Considering the multi-billion dollar size of the cryptocurrency market, some correlations are likely to occur over time. The Bitcoin-Gold correlation is the most interesting, although the former has significantly outperformed the bullion market over the years.