Bitcoin-Nasdaq 100 Correlation Hits Three-12 months Low, Signaling Potential Decoupling

A brand new report from Kaiko Analysis highlights that the correlation between Bitcoin and the tech-heavy Nasdaq 100 has fallen to only 3%, the bottom degree in three years.

A latest report from Kaiko Analysis exhibits that the correlation between Bitcoin and the tech-heavy Nasdaq 100 has fallen to its lowest degree in three years at simply 3%. This implies a doable decoupling between the 2 belongings. In the meantime, the correlation between cryptocurrencies and gold reached its highest degree in years final week, with each belongings experiencing positive aspects in 2023.

In the meantime, the Nasdaq 100’s correlation with conventional threat belongings has steadily declined since averaging 60% in 2022. Nonetheless, analysts famous that the Nasdaq 100 has technically entered a bull market, surging greater than 20% from its 2022 low.

Dessislava Ianeva, an analyst at Kaiko Analysis, mentioned the drop in correlation was largely on account of bitcoin being closely impacted by cryptocurrency-specific occasions, similar to latest regulatory developments. Tech shares haven’t felt the identical influence, she defined.

Whereas the cryptocurrency market has skilled enormous volatility in recent times, with Bitcoin usually thought of a barometer of general market sentiment, the declining correlation with the Nasdaq 100 means that their respective trajectories could diverge. This could possibly be an indication that the panorama is altering, with cryptocurrencies performing more and more independently of conventional tech shares.

Bitcoin, the biggest cryptocurrency by market capitalization, has confronted regulatory scrutiny and authorized challenges in numerous jurisdictions. These elements, mixed with the nascent nature of the cryptocurrency market, result in a heightened sensitivity to particular occasions and developments.

Notably, the Nasdaq 100 index, which is made up of a few of the largest non-financial corporations listed on the Nasdaq inventory change, has risen strongly since its December 2022 low. This upward trajectory was pushed by robust earnings stories, improvements within the tech sector, and optimistic market sentiment.

Because the cryptocurrency market continues to evolve, buyers and market contributors might be intently watching the relative dynamics between Bitcoin and conventional inventory market indices. The declining correlation with the Nasdaq 100 highlights the necessity for a nuanced understanding of the elements affecting these markets, in addition to the rising significance of cryptocurrency-specific occasions in shaping the general panorama of digital belongings.