A new report from Kaiko Research highlights that the correlation between Bitcoinand the tech-heavy Nasdaq 100 has fallen to just 3%, the lowest level in three years.
A recent report from Kaiko Research shows that the correlation between Bitcoin and the tech-heavy Nasdaq 100 has fallen to its lowest level in three years at just 3%. This suggests a possible decoupling between the two assets. Meanwhile, the correlation between cryptocurrencies and gold reached its highest level in years last week, with both assets experiencing gains in 2023.
Meanwhile, the Nasdaq 100’s correlation with traditional risk assets has steadily declined since averaging 60% in 2022. However, analysts noted that the Nasdaq 100 has technically entered a bull market, surging more than 20% from its 2022 low.
Dessislava Ianeva, an analyst at Kaiko Research, said the drop in correlation was largely due to bitcoin being heavily impacted by cryptocurrency-specific events, such as recent regulatory developments. Tech stocks haven’t felt the same impact, she explained.
While the cryptocurrency market has experienced huge volatility in recent years, with Bitcoin often considered a barometer of overall market sentiment, the declining correlation with the Nasdaq 100 suggests that their respective trajectories may diverge. This could be a sign that the landscape is changing, with cryptocurrencies performing increasingly independently of traditional tech stocks.
Bitcoin, the largest cryptocurrency by market capitalization, has faced regulatory scrutiny and legal challenges in various jurisdictions. These factors, combined with the nascent nature of the cryptocurrency market, lead to a heightened sensitivity to specific events and developments.
Notably, the Nasdaq 100 index, which is made up of some of the largest non-financial companies listed on the Nasdaq stock exchange, has risen strongly since its December 2022 low. This upward trajectory was driven by strong earnings reports, innovations in the tech sector, and positive market sentiment.
As the cryptocurrency market continues to evolve, investors and market participants will be closely watching the relative dynamics between Bitcoin and traditional stock market indices. The declining correlation with the Nasdaq 100 highlights the need for a nuanced understanding of the factors affecting these markets, as well as the growing importance of cryptocurrency-specific events in shaping the overall landscape of digital assets.