The correlation between bitcoin and the Nasdaq Composite Index has reached its highest level since July 2020. These observations were shared by analysts at Arcane Research.
A similar indicator (30-day moving average) between the first cryptocurrency and gold plummeted to an all-time low, with the dollar to its lowest since March 2020
Such dynamics was attributed by experts to expectations of tightening of monetary policy by the Fed. The dollar strengthened against other currencies amid forecasts of less aggressive actions of central banks of other countries in response to inflation.
Higher borrowing costs lead to a downward revision in the trajectory of high-tech stocks. The rising price correlation between Bitcoin and the Nasdaq Composite index reflects digital gold’s belonging to the category of risky assets in the eyes of institutional investors, experts stressed. They doubted that the correlation would remain at the current high values.
Gold is currently serving as a hedge against inflation, while Bitcoin-ETPs are recording outflows. In the first two weeks of April their AUM is down by 9,871 BTC. If the current pace continues, before the end of the month there will be a renewal of the historical anti-record of July 2021, when investors withdrew 13,849 BTC.
The current dynamics may also indicate the upcoming formation of the bottom in the medium term. Experts recalled that the negative dynamics of flows to funds last summer coincided with the end of the correction in digital gold.
Earlier, Galaxy Digital founder Mike Novogratz warned that the first cryptocurrency will “take off again” as soon as the Fed takes a pause in tightening monetary policy