The largest digital currency, Bitcoin, has begun to move in sync with the surging Nasdaq 100 Index, a key tech benchmark that has rallied over 40% this year due to the excitement surrounding artificial intelligence. This reestablished correlation, seen as a positive development by cryptocurrency enthusiasts, comes after a period of divergence between these two asset classes.
Earlier this year, in June and July, the directional relationship between Bitcoin and technology stocks experienced a breakdown. However, recent data indicates a rebound in their 30-day correlation coefficient to nearly 0.4 from a negative 0.1 during that period.
This renewed correlation follows a significant crash in virtual coins in 2022 that weakened the relationship between Bitcoin and various traditional assets. This led to reduced investor interest in the market.
The initial promotion of Bitcoin by its proponents was as an asset uncorrelated with traditional financial instruments. However, during the pandemic era marked by substantial stimulus measures, both cryptocurrency and tech stocks saw simultaneous surges.
In recent trading, Bitcoin has been on an upward trajectory for three consecutive days, with an increase of up to 2.2%, reaching $26,692. At the same time, the Nasdaq 100 also saw a rise of 0.8%.
Josh de Vos, research lead at crypto analytics firm CCData, anticipates that barring significant news events that often cause large reactions in Bitcoin's value, it is likely that the cryptocurrency will continue to correlate more closely with stocks in the coming months.
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