Bitcoin Wishes to Sever Ties with Stocks

Bitcoin wants to split up with the stock markets. BTC had a strong association with tech equities for most of its turbulent 2022. It is making one of its most concerted efforts to break free.

Its 30-day correlation with the Nasdaq fell to 0.26 last week, the lowest level since early January, where a value of one suggests that the two assets are moving in lockstep.

The correlation, which measures how much the two move in sync over 30 days, has been above 0.75 for much of the year and has reached perfect synchrony at times – at 0.9614 and 0.934 in May and September, respectively.

The embryonic uncoupling coincides with a period of relative quiet and consolidation for the adolescent cryptocurrency, a year after it began its epic plunge from the dizzying heights of $69,000 in November last year.

Bitcoin is trading near one-month highs above $20,500 and gained more than 5% last week, outpacing the Nasdaq’s 2% increase as Microsoft, Alphabet, Meta, and Amazon reported disappointing quarterly earnings. However, the crypto winter has been harsh.

Market Cap Plummets

From approximately $3T in November 2021, the total market cap for cryptocurrencies has plummeted by more than a third to $984 billion.

Market participation has also declined, with the average daily trading volume of digital asset goods decreasing to $61.3 million as of Oct. 25, down from about $700 million in November of the previous year. Furthermore, a record 55,000 bitcoin were removed from the top exchange Binance on Oct. 26, indicating that coins are going to wallets for the long term. Exchange outflows could signal that some significant buyers were “sniffing out” the conclusion of the bear market.

However, it is anyone’s judgment whether volatile bitcoin will begin to climb or sink again or if it will quickly come back to the embrace of technology stocks.