Correlation between Bitcoin and NASDAQ drops to zero | CoinDesk JAPAN

Bitcoin (BTC) has moved in tandem with Wall Street’s tech index, the Nasdaq (NASDAQ), for much of the past four years, but it appears to have finally decoupled.

The 40-day correlation between Bitcoin and Nasdaq is currently zero, indicating a lack of relationship between the asset classes, according to data from technical analysis research firm Fairlead Strategies. .

The correlation value is determined by a formula based on the long-term price movements of NASDAQ and BTC. A correlation of 0.5 or higher indicates a moderate relationship between the two assets, while a value of 0.7 or higher indicates a strong relationship. Negative numbers suggest otherwise.

Currently, the correlation between Bitcoin and Nasdaq is zero. (Fairlead Strategies)

The correlation between Bitcoin and Nasdaq has been consistently positive since the beginning of 2020, peaking at 0.8 during the 2022 crypto bear market.

The latest divergence between the two can be explained by the fact that since October last year, the crypto market has been pinning its hopes on the issuance of a physical Bitcoin exchange-traded fund (ETF) in the United States. The Securities and Exchange Commission (SEC) is likely to approve more than 10 spot ETFs, potentially opening the door to widespread adoption of this asset class.

The broken correlation means Bitcoin can act as a portfolio diversifier. Fairlead Strategies expects Bitcoin to remain uncorrelated with the Nasdaq for some time.

Fairlead analysts, led by founder and managing partner Katie Stockton, wrote in a note to clients on January 8 that “events such as the approval of a Bitcoin spot ETF and the April halving “Given the current opportunity, the correlation between Bitcoin and Nasdaq will remain low in the coming months.”

“Also, risk assets are generally less correlated in bull markets than in bear markets,” the analyst added.

｜Translation: CoinDesk JAPAN
｜Edited by: Toshihiko Inoue
｜Image: Fairlead Strategies
｜Original text: Bitcoin Decouples From Nasdaq Amid ETF Speculation