Bitcoin has slowly begun to decouple from equities, now nearing its lowest correlation with the stock market in 2022.
A 40-day correlation coefficient between Bitcoin and the Nasdaq 100 index has fallen below 0.5 – levels not seen since January, according to Bloomberg.
By comparison, the correlation was about 0.6 at the end of last month and ran as high as 0.85 in May.
“If the still-positive tie continues to ebb, that may stir questions about whether beaten-down virtual assets are closer to a nadir and set for a recovery,” stated Bloomberg.
Bitcoin has tracked stocks to some degree since mid-2021, but never so tightly as in May. Stocks and crypto plunged in tandem that month days after the Federal Reserve announced a 0.5% interest rate hike – a 22-year record at the time.
Bitcoin fell further in June as inflation continued rising and the Fed pursued an even more aggressive policy. It now trades near late 2020 price levels, while the Nasdaq 100 trends at yearly lows.
However, Bitcoin’s price roughly sustained its level in the face of short-term volatility following June’s 9.1% CPI report on Wednesday. On the other hand, stocks tumbled on Tuesday in anticipation of the unsettling print.
Bloomberg anchor Tim Stenovec highlighted this discrepancy on Thursday. “Big equity selloff but bitcoin isn’t crashing,” he tweeted.
FTX CEO Sam Bankman Fried recently told Real Vision last week that he sees little reason to believe crypto hasn’t bottomed yet. “I think the unwinding that had to happen has happened,” he said.
Other investors like Jordan Belfort (aka the Wolf of Wall Street) have recently predicted that market participants will “start to trade [Bitcoin] more like a store of value and less like a growth stock” in the long run.