Arcane Research: Bitcoin–tech stock correlation hits its highest level since July 2020

The correlation between Bitcoin and the Nasdaq Composite index reached its highest level since July 2020. These observations Arcane Research analysts.

A similar measure (the 30-day moving average) between the first cryptocurrency and gold collapsed to a record low, with the dollar to its lowest since March 2020.

Experts attributed this dynamic to expectations of tighter monetary policy by the Fed. The dollar strengthened against other currencies amid forecasts of less aggressive actions by central banks in other countries in response to inflation.

The higher borrowing costs are driving downward revisions to the growth trajectory of high-tech stocks. The rise in the price correlation between Bitcoin and the Nasdaq Composite reflects digital gold’s status as a risk asset in the eyes of institutional investors, the analysts noted. They questioned whether the correlation would remain at such high levels.

Gold currently serves as a hedge against inflation, while Bitcoin-ETP are recording outflows. In the first two weeks of April their AUM fell by 9 871 BTC. If the current pace continues, the month will see a new all-time low, surpassing July 2021’s outflow of 13 849 BTC.

The current dynamics could also signal the formation of a bottom in the medium term. Experts noted that negative inflows to funds last summer coincided with the end of the correction in digital gold.

Earlier, BitMEX co-founder Arthur Hayes predicted a drop in Bitcoin to $30,000 by the end of the second quarter as a result of the Nasdaq’s decline.

Earlier, Galaxy Digital founder Mike Novogratz warned that the leading cryptocurrency would rally again once the Fed pauses its tightening of monetary policy.

Subscribe to ForkLog’s channel on YouTube!