As the selling pressure on Bitcoin continues, the world’s largest cryptocurrency experiences another dip, falling by 3% and trading under $27,000. Currently, the BTC price seems to be fluctuating with a market cap of $519 billion. Intriguingly, Bitcoin has shown a weakened correlation with technology stocks since the beginning of 2023.
In May, Bitcoin closed with its first negative monthly performance for the year 2023, while the tech-heavy Nasdaq 100 index gained over 8% due to increasing interest in artificial intelligence (AI). Bitcoin investors, who previously enjoyed the weakened correlation with tech stocks as BTC rallied, now face the consequences of this shift. The 30-day coefficient for Bitcoin and Nasdaq 100 has dropped to around 0.2 compared to 0.8 in May 2022. A reading of 1 indicates that both are moving in lockstep, and a reading of -1 implies they are moving in opposite directions.
The impressive Nasdaq 100 rally was significantly influenced by the AI buzz, as shares of companies like Nvidia Corporation soared by 30% last month. In contrast, Bitcoin failed to deliver a decisive breakout above $30,000, ending May 8% down. Despite this decline, Bitcoin’s total 2023 gains remain at a respectable 64%.
Simultaneously, some analysts question the sustainability of Nasdaq 100’s 30% climb since early 2023. They argue that only a small number of mega-cap companies have fueled this growth. Stephane Ouellette, CEO of FRNT Financial Inc., told Bloomberg, “Correlations have and will continue to be dynamic in the space as adoption grows and changing investment theses dominate trading windows.”
Interestingly, some experts suggest that Bitcoin’s decoupling from the Nasdaq might be advantageous for the asset in the long run. The strong AI narrative seems to serve as a significant catalyst for tech stocks to rally, outperforming leading digital currencies such as Bitcoin and Ether.
Therefore, it appears that the dynamics and correlations within the crypto and tech spaces are continuously evolving due to growing adoption and changing investment strategies. For cryptocurrency enthusiasts and investors, keeping a close eye on these movements and conducting thorough market research before making investment decisions is of utmost importance.
Source: Coingape
