The beginning of 2023 has provided Bitcoin (
Bitcoins softening correlation to equities
Volatility, realized profits and trading volume are helping Bitcoin decouple from equities. As reported by Cointelegraph, Bitcoin’s price action typically has been closely correlated to U.S. equities.
Bitcoin’s 30-day correlation to the Nasdaq reached 0.29 on Jan. 17, the highest BTC divergence from equities since December 2021.
Vetle Lunde a Senior Analyst at Arcane Research explains what decoupling means to the Bitcoin market.
“Softening correlations is a positive development in the market.”
Bitcoin’s previous correlation could have been caused by institutional investors bundling BTC with other risk assets and large growth companies like Tesla holding exposure.
Now that institutional investors and growth companies are holding less Bitcoin, correlation to markets may lessen in the future.
Equities markets could continue to flutter due to the resiliency of high inflation, but Bitcoin’s divergence from the stock market could help BTC become an investment hedge. According to some analysts, if Bitcoin can become a hedge to equities, institutional investors may return to the market.
The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
