Bitcoin Correlation With Nasdaq Now Lowest Since Dec 2021

Data shows that Bitcoin’s correlation with Nasdaq has fallen to the bottom since December 2021 as BTC continues its strong momentum.

Bitcoin’s 30-Day Correlation With Nasdaq Plunges To Just 0.29

Based on the most recent weekly report from Arcane Research, movements in US markets have gotten less relevant to BTC. The “30-day correlation” is an indicator that measures how closely Bitcoin and one other given asset performed throughout the past month.

When the worth of this metric is positive, it means BTC has been responding to changes in the worth of the opposite asset by moving in the identical direction. Then again, negative values imply BTC has been displaying opposite price motion relative to the asset.

Naturally, the correlation is precisely equal to zero, suggesting the costs of the 2 assets aren’t tied in any shape.

Now, here’s a chart that shows the trend within the 30-day correlation between Bitcoin and Nasdaq over the past couple of years:

Looks just like the value of the metric has seen a plunge in recent days | Source: Arcane Research's Ahead of the Curve - January 17

As displayed within the above graph, the Bitcoin 30-day correlation with Nasdaq was at a high positive value throughout most of 2022, suggesting that BTC was moving closely with the US equity then.

The report notes just a few reasons behind the 2 assets being this correlated. First, institutional investors, who treat BTC as a risk asset, saw a rising presence out there during this era. These investors are sensitive to macro movements and thus contribute to Bitcoin’s high correlation with the stock market.

Second, growth firms like Tesla held large amounts of Bitcoin exposure previously yr. This presence of public firms also naturally led to BTC being tied with Nasdaq.

The third factor was the selling being done by miners. This cohort was being pressured by higher rate of interest costs (as they took on large debts to expand their operations) and the rising energy costs, which left them with no alternative but to unload their BTC reserves.

The fourth and last reason was the short-sighted decisions made by crypto firms, who prioritized growth over healthy financials within the low-interest rate regime of the past. 2022’s prolonged bear market has left most of those firms with huge losses, forcing a few of them to go bankrupt.

Most recently, nonetheless, the Bitcoin correlation with Nasdaq has decreased significantly, because the metric’s value is just 0.29, the bottom level observed since December 2021, greater than a yr ago.

“In comparison with 2022, public firms hold far less BTC, miners have less BTC to sell, and several other institutional players have left the market,” explains Arcane Research. “All of those aspects are in favor of softening correlations onwards.”

BTC Price

On the time of writing, Bitcoin is trading around $21,200, up 22% within the last week.

Bitcoin Price Chart

The worth of the crypto continues to maneuver sideways | Source: BTCUSD on TradingView

Featured image from Maxim Hopman on, charts from, Arcane Research

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