09 May 2022
Bitcoin’s correlation to US equities grows further
Bitcoin’s correlation to risk assets continues to grow, leading bitcoin’s 30-day correlation to Nasdaq to reach a definite all-time high.
Bitcoin has been mirroring the Nasdaq performance throughout 2022, and as derisking has escalated in the market, bitcoin has clearly been impacted, evident by BTC’s 30-day correlation to the Nasdaq index soaring to a new all-time high of 0.8.The tight correlation between BTC and Nasdaq was particularly striking during last week’s FOMC, where both assets moved in tight tandem.While bitcoin is following the Nasdaq index closely, it has outperformed many equities listed on Nasdaq.This is caused by idiosyncratic news related to these companies during the earnings season and various responses to the current rate hikes.Bitcoin’s correlation to equities and tech may be hard to grasp. While interest rates and a strengthening dollar impacts BTC, the similarities stop there.The growing correlations are likely caused by the institutionalization of bitcoin, with bitcoin being basketed as a risk asset alongside growth stocks. As long as the stock market struggles and no material changes occur in how professional investors treat bitcoin, bitcoin is likely to fare alongside Nasdaq and the S&P 500.