Bitcoin’s Correlation with Nasdaq Falls to 1-Year Low; Here’s what that means
The relationship between the stock market and the cryptocurrency sector has been a matter of interest for quite some time now, and recently the correlation between Bitcoin (BTC), the largest digital asset by market capitalization, and the Nasdaq 100 index has recorded its lowest levels in a year.
As it happens, the correlation of daily returns between the Nasdaq 100 and Bitcoin has fallen to the lowest level since the US Federal Reserve signaled an interest rate hike in early 2022, the crypto trading and investment platform Coin shares so on March 8.
Specifically, the level of (de)correlation between the two at press time was 34%, close to that of February 2022, and increased soon after. According to the platform, the current “correlation could continue as Fed rate hikes slow, further entrenching Bitcoin as a rate-sensitive asset.”
In essence, Bitcoin previously tended to move in the same direction as the major companies listed on the Nasdaq 100 index, leading some financial experts to see this as an argument against the digital asset’s role as a diversifier. However, the recent decor relationship may prove them wrong.
Bitcoin price analysis
In fact, as it stands now, the representative decentralized finance (DeFi) asset is currently changing hands at the price of $21,701, showing a 1.44% decline on the day, in addition to losses of 8.18% and 4, 76% on its weekly and monthly charts, respectively.
Meanwhile, the crypto market has continued to crash under significant selling pressure and the increasing ‘FUD’ (Fear, Uncertainty, and Doubt) in recent days, which together have managed to drag the market cap to fall below the psychological threshold of $1 trillion.
In addition to FUD, the US government has moved $1 billion worth of Bitcoin they seized from the anonymous darknet marketplace Silk Road in 2021 and 2022, supporting fears of an impending BTC dump, which could exert even more pressure on the market and see BTC losing several support levels.
However, this could also represent a good opportunity to buy the virgin crypto before the price rises again, as Bitcoin has shown a consistent pattern of optimal decision-making times in crypto trading strategies – buy, hold and sell – over the past year.
Disclaimer: The content of this page should not be considered investment advice. Investment is speculative. When you invest, your capital is at risk.
