Bitcoin Breaks Away from Tech Stocks as a Safe Haven Asset

Bitcoin has been historically correlated with US tech stocks, but recent data shows that this relationship is weakening. Could Bitcoin be emerging as a new safe haven asset in times of economic and geopolitical turmoil?

Bitcoin’s Correlation with Stocks Sinks to New Lows

Bitcoin is often considered a risky asset that moves in tandem with the US stock market. However, Bitcoin’s recent performance has defied this expectation, as it has surged to new highs while tech stocks have plummeted.

According to correlation data with the Invesco QQQ ETF, which tracks 100 Nasdaq-listed companies, including Apple, Microsoft, and Amazon, Bitcoin’s correlation with tech stocks has dropped to -0.82, the lowest level in four years. This means that Bitcoin and tech stocks are moving in opposite directions.

The last time Bitcoin’s correlation with tech stocks was this low was in late 2019, when it reached -0.84. Since then, Bitcoin and tech stocks have mostly moved together, especially during the Terra LUNA collapse in May 2022.

⚠️ Bitcoin's strong rally and Nasdaq's strong selloff have caused the #BTC / #QQQ correlation to reach the lowest level (strongest negative correlation) in nearly 4 years.$BTCUSD / $QQQ / $GOOG pic.twitter.com/5uupFPuvu4

— SPY Master (@SpyMasterTrades) October 25, 2023

Bitcoin Cautiousness

Some crypto enthusiasts have celebrated Bitcoin’s decoupling from tech stocks as a sign of its maturity and resilience. They argue that Bitcoin is a “lifeboat” that can protect investors from the sinking fiat-based economy.

However, not everyone is convinced that Bitcoin can maintain its rally. Some analysts have warned that Bitcoin’s decoupling from tech stocks is temporary and that the stock market downturn will eventually drag Bitcoin down.

Tony Edward, the founder of the Thinking Crypto podcast, said that Bitcoin is just catching up with the stock market momentum and that history shows a high correlation between Bitcoin and tech stocks. He expects that the stock market weakness will lead to capital outflows from Bitcoin and crypto.

I agree with David here, I lean towards momentum play. Bitcoin lagged behind the stock market and is now catching up.

History shows us a high correlation between BTC and Tech stocks. The stock market is showing weakness so I think the capital is flowing to BTC and crypto for a… https://t.co/XWcyIQqPlF

— Tony Edward (Thinking Crypto Podcast) (@ThinkingCrypto1) October 25, 2023

Why This Matters

Bitcoin’s decoupling from tech stocks challenges the prevailing narrative that Bitcoin is a risky asset. If Bitcoin can continue to rise while tech stocks fall, it may soon be regarded as a trusted store of value, similar to gold.

“Yeah Bitcoin trades like a tech stock just check the Nasdaq.”

De-coupling is here… 😎 pic.twitter.com/jTMVv5l2gf

— Bitcoin Archive (@BTC_Archive) October 25, 2023

Bitcoin’s decoupling from tech stocks also has implications for its adoption and regulation. As Bitcoin becomes more independent from traditional markets, it may attract more investors who are looking for alternative assets. It may also face more scrutiny from regulators who are concerned about its impact on the financial system.