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Bitcoin Up, Stocks Down as BTC Correlation to Nasdaq Weakens

Posted by Andries Van Tonder on July 15, 2022 - 7:54am
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Bitcoin Up, Stocks Down as BTC Correlation to Nasdaq Weakens

Bitcoin's 30-day correlation to tech stocks has fallen again after seeing record-high correlation just before the May crash.

By Mat Di Salvo

Bitcoin. Image: Shutterstock

While the crypto and stock markets both remain bearish, Bitcoin’s correlation with stocks is close to its lowest point this year. The 40-day correlation between the largest cryptocurrency and the Nasdaq 100 index is now below 0.50, according to Bloomberg data. 

Bitcoin is trading for $20,712 at the time of writing, a 2.5% increase in the past 24 hours according to CoinMarketCap. In contrast, U.S. stocks were hit hard on Thursday as investors worry about the Federal Reserve continuing to hike interest rates. And it isn’t just the tech-heavy Nasdaq: global equities markets also took a beating on Thursday—along with oil—as more investors move towards holding onto their greenbacks.

Correlation with the Nasdaq is measured on a -1 to 1 scale: -1 means the prices always move in opposite directions; 1 means they move together. Today, Bitcoin is at its lowest correlation with the Nasdaq since early January. 

This is a very different story from as recently as April, when its 30-day correlation with the Nasdaq was at its highest level in over a year. 

The correlation is still positive, which means that Bitcoin and tech stocks still move in similar directions. But if the correlation continues to weaken, it might be taken as a sign crypto has seen the bottom and is ready to rebound.

For most of the pandemic, Bitcoin has moved in the same direction as stocks. Right now it is down nearly 70% from its all-time high last November near $69,000. This is largely because crypto is seen as a risky asset by many big investors, and we are in a risk-off environment as sky-high inflation hits virtually every country on the planet. Political uncertainty with Russia’s war in Ukraine and supply chain chaos from China make a recession seemingly imminent. 

Since 2020, Bitcoin had been going more mainstream than ever as major companies like MicroStrategy and Tesla added it to their balance sheets and even previous Wall Street skeptics changed their tune, leading Bitcoin to perform like a tech stock. Until it crashed in May. 

Could the crypto rebound be in full swing?

Andries Van Tonder thank you Neal
July 17, 2022 at 9:01am
The Neal and Janet Brown Family Trust I won't say how much but we have pulled out some cash to help us get through challenges, especially if credit card systems go offline, or who knows what else might happen. I strongly suggest that everyone who is able to do so, to likewise pull out some cash for the unknown. We also have some silver coins as well as uncirculated & proof sets from US mint. They are both an investment, collectors items, and emergency currency as well. Coins are not as liquid as cash, but they are also not as impacted by meteoric inflation rates. These are certainly scary times and they will surely get worse before they get better. Please prepare yourselves with food storage, cash, precious metals if feasible, and other assets that could be traded for certain items if necessary.
July 17, 2022 at 5:59am
Andries Van Tonder Thank you Neal. In contrast, U.S. stocks were hit hard on Thursday as investors worry about the Federal Reserve continuing to hike interest rates. And it isn’t just the tech-heavy Nasdaq: global equities markets also took a beating on Thursday—along with oil—as more investors move towards holding onto their greenbacks.
July 16, 2022 at 12:30pm
Andries Van Tonder Thank you Adonel
July 16, 2022 at 12:29pm
Andries Van Tonder thank you for reading it Simon
July 16, 2022 at 12:29pm
The Neal and Janet Brown Family Trust In my opinion they are scrambling to attempt to explain why crypto does what it does.
July 16, 2022 at 3:40am
Adonel Lowings Thank you for the update on Bitcoin Andries
July 15, 2022 at 9:36am
Simon Keighley Interesting to read the correlation between bitcoin and stocks is continuing to weaken - the crypto sector may be ready for a rebound. Thanks for sharing, Andries.
July 15, 2022 at 9:23am
Andries Van Tonder Thank you Barbrin. The correlation is still positive, which means that Bitcoin and tech stocks still move in similar directions. But if the correlation continues to weaken, it might be taken as a sign crypto has seen the bottom and is ready to rebound.
July 15, 2022 at 8:31am
Barbrin van Tonder This is very good news thank you for posting this blog Andries
July 15, 2022 at 8:06am
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