The correlation between Bitcoin and the Nasdaq, the US stock market index for technology stocks, has reached its lowest level since July 2021. This decline reflects a growing divergence between the two markets, with Bitcoin gradually detaching itself from its links with US equities.
A correlation in free fall
According to data published by Block Scholes, the 90-day correlation between Bitcoin and the Nasdaq fell to just 3% last June. This marks a significant departure from the beginning of 2022, when the correlation was still 60%. Bitcoin therefore seems to be heading in a different direction to US technology stocks, even though it has enjoyed one of its most brilliant rises in recent months.
A refocusing of the Bitcoin market?
This divergence between the cryptocurrency and technology markets could be interpreted as a positive sign for Bitcoin. Indeed, it’s possible that the world’s leading crypto-currency is refocusing on its own momentum, independent of fluctuations in the US stock market.
- Disconnecting from the markets: This trend could indicate that Bitcoin is no longer dependent on the moods of the US stock markets, and is detaching itself from its ties to technology stocks.
- Attractiveness of Bitcoin: An independent Bitcoin market could also attract more investors, who would no longer be held back by fluctuations in the US stock markets.
- A positive development for the sector: This divergence between markets means that Bitcoin is not just an alternative to traditional equities, but is evolving according to its own dynamic and can be considered an asset in its own right.
Bitcoin outperforms stock market indices
The decrease in correlation coincides with the rise in the price of Bitcoin, which reached its highest level in a year following the announcement of a demand for spot ETFs (Exchange Traded Funds) by BlackRock, the global asset management giant. As a result, Bitcoin has outperformed stock market indices since the start of the year and over the last twelve months.
Factors influencing the rise of Bitcoin
Several factors have contributed to this rise in the price of Bitcoin:
- Cash ETF filing: BlackRock’s announcement of the Bitcoin ETF filing was seen as a bullish signal, boosting investor confidence in the crypto-currency.
- Renewed interest in cryptocurrencies: Investors are increasingly turning to digital assets like Bitcoin, looking to diversify their portfolios and take advantage of the potential returns offered by these assets.
- Regulatory advances: Progress in cryptocurrency regulation also offers a more reassuring framework for investors, and is contributing to the growing adoption of Bitcoin.
Conclusion: a promising development for Bitcoin?
The declining correlation between Bitcoin and the Nasdaq bears witness to a growing divergence between the markets. This trend could be interpreted as a positive sign for the world’s leading crypto-currency, which seems to be gradually detaching itself from its links with US equities to evolve according to its own dynamics. If this trend continues, it could strengthen Bitcoin’s appeal to investors and consolidate its position as an independent asset.
