Record BTC-NASDAQ correlation downplayed by dip
The fears of a crypto crash are growing in the community with a bear run dominating the market. At press time, Bitcoin was trading at $39,986, down by about 2.15% over the last day. Ethereum, on the other hand, was down by 0.14% in the last 24-hours. Notably, the previous week saw around $300 billion being wiped out from the market.
Amidst the dip, Bloomberg analysts found the highest correlation between the Bitcoin price and Nasdaq in history. Commenting on the 40-day record correlation the analyst said,
“Increase further erodes the argument that Bitcoin works well as a diversifier, one that’s been held up by proponents as key to its appeal.”
Source: Bloomberg
The above chart has raised growing concerns over a developing pattern that has emerged in recent months. The pattern is accompanied by a sell-off pressure of crypto assets after the Feds increased the interest rates.
Another striking observation is that Bitcoin and Nasdaq have shown strong signs of correlation since 2020. Crypto analyst, Anthony Pompliano suggests this is a result of the change in the holder base of Bitcoin investors.
As per him, there are primarily two major groups that now hold Bitcoin. First, the ‘Wall Street institution world.’ This group regards Bitcoin as their most risky asset. Second, we have the “Everyday average citizens” who hold Bitcoin as a reserve asset.
Arthur Hayes, Co-founder of BitMEX, also suggests a similar opinion about the growing correlation between Bitcoin and Nasdaq,
“There are many crypto market pundits who believe the worst is over… I believe they ignore the inconvenient truth (that crypto prices are currently an indicator of the S&P 500 and Nasdaq 100) and do not trade on the fundamentals of being peer-to-peer, decentralized,
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