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.
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.
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.