Here’s how Bitcoin has performed as a US tech stock; Is it still a hedge?
Bitcoin, and cryptoassets in general, have become more correlated with tech stocks in recent months, according to research.
Bitcoin seems to have lost its property as a store of value or inflation hedge. This has been proven by the results in the third quarter, which have been highly correlated to US technology stocks.
Messari researcher Kunal Goel posted a chart on October 4 that reveals the extent to which Bitcoin markets and tech stocks have fallen in sync.
In a report on Bitcoin’s performance for the third quarter, Goel said: “Bitcoin largely lost its inflation hedge and store of value in the market after falling 72% from ATH.”
Encryption and technology market tandem
The chart shows that the BTC price and the Nasdaq 100 rebase can be almost perfectly overlapped since the beginning of 2022.
Since January 1, Bitcoin has fallen 57% from just over $46,000 to current levels of around $20,000. Over the same 9 months, the tech-heavy Nasdaq 100 has lost 33.5% from 16,500 points on Jan. 1 to below 11,000 by the end of September, according to TradingView.
Admittedly, Bitcoin’s losses are heavier because it is a far more volatile asset, but the peaks and troughs of the two charts are practically the same.
Goel noted that since hitting its November 2021 all-time high of $69,000, Bitcoin has fallen 72% amid a macro environment of risk. “Rather than a store of value, the price action has been similar to that of a high-beta US technology stock,” he said, before adding that prices have continued to suffer through the Federal Reserve’s conservative regime.
The inflation hedge narrative has taken a big hit this year, reinforced by institutional selling and capitulation by major crypto lending platforms, further adding to volatility.
“As such, the asset has not yet ‘matured’ into a lower risk spectrum, although some institutions came.”
That said, withdrawals of more than 70% are nothing new for Bitcoin and its brethren, as they have occurred in the previous three market cycles.
In comparison, gold prices have also lost their valuable assets as the commodity has fallen more than 18% from around $2,000 in Q1, 2022, to around $1,630 by the end of Q3.
BTC takes back $20,000
Bitcoin prices have managed to recover 2.6% in the last 24 hours, but the asset remains firmly capped. At press time, it was trading at $20,145, up 5.4% in the past week, according to CoinGecko.
However, there doesn’t seem to be a short-term end in sight for the consolidation, as crypto markets remain remarkably flat despite the recent devaluation of several fiat currencies around the world.
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