Bitcoin
Bitcoin (BTC) Trading in conjunction with Tech Stocks — TradingView News
Bitcoin, the leading cryptocurrency, is trading in lockstep with technology stocks once again, according to a Friday report from Bloomberg.
The 90-day correlation between the top cryptocurrency and the tech-heavy Nasdaq 100 index reached 0.46, the highest level in nearly a year.
The growing correlation undermines the portfolio diversification narrative that is often promoted by Bitcoin proponents.
Earlier this year, Bitcoin’s correlation with stocks decreased significantly. In fact, it turned negative in April, according to Fidelity’s Jurrien Timmer.
The correlation between the largest cryptocurrency and stocks tends to fluctuate based on macro-financial conditions. For example, it spiked to 0.50 in May 2022. It also spiked in 2020 during the QE era.
Earlier this week, major US stock market averages managed to jump to record highs after the latest CPI report showed declining inflation in the US.
Bitcoin also recovered, reclaiming the much-coveted $67,000 level and reaching its highest price since early April.
The latest inflation data has revived bullish sentiment as Wall Street believes the US Federal Reserve could now end up cutting rates multiple times this year. Lower borrowing costs would be extremely beneficial for risky assets such as stocks and cryptocurrencies.
However, the Fed has not yet managed to break inflation, which may suggest that this investor optimism may be premature.
Earlier today, US Federal Reserve Governor Michelle Bowman predicted that inflation would likely remain elevated “for some time.” However, Bowman emphasized that she would be willing to raise rates if necessary.