Correlation between bitcoin and Nasdaq worries investors

This phenomenon worries both crypto investors and stock market investors, with both feeling that both are distorting each other’s trend.

Bad times for bitcoin and bad times for the Nasdaq. A correlation seems to have settled between the Wall Street tech index and bitcoin, the queen of cryptocurrencies. A somewhat disturbing phenomenon.

This phenomenon worries both crypto investors and stock market investors, with both feeling that both are distorting each other’s trend. If we look at the curves since the beginning of the year, it is quite impressive, that of bitcoin and that of the Nasdaq 100 in particular seem to marry.

Not very healthy

However, all this is not very healthy, we have the impression that investors, especially Americans, have a herd reflex, exposing themselves to bitcoin as if we were exposing ourselves to technology in general. However, we are talking about two very different asset classes. On the one hand we have shares of growth companies and on the other, a cryptocurrency which has its own volatility, its own technical fundamentals, and which should be sheltered from the fluctuation of the stock markets.

Some even use it to cover themselves. But at the same time, Bitcoin is a victim of more and more bridges between the two worlds. More and more companies, such as Coinbase, listed online brokers that offer cryptocurrency services, or even large banks that are entering the cryptocurrency market, are starting to establish trend links.

All this is also intensified by the large number now of ETFs, financial products that track the price changes of cryptocurrencies. In particular, we had a worrying signal in April with a record number of Bitcoin ETF exits according to UBS figures (-417 million dollars) in one month, it’s a record…

This is the flip side of the generalization and popularization of bitcoin within the traditional financial market. It is now subject to the same movements of risk aversion on the part of large investors.

Antoine Larigauderie edited by PA.

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