- Bitcoin is up in the past week while the Nasdaq dropped.
- Advocates are celebrating that Bitcoin has “decoupled.”
- “It’s obviously a ridiculously small time frame,” said Eric Balchunas, Bloomberg ETF expert.
Tech stocks and Bitcoin — is the correlation over?
While equities have been getting walloped this week as Donald Trump’s erratic policies spook investors, Bitcoin’s price has remained relatively even.
The top cryptocurrency is up 7% in the past week, and actually rose during a rout on Monday that saw steep declines in the Nasdaq and S&P 500 indexes.
On Tuesday, Bitcoin continued recouping its losses from ‘Liberation Day,’ rising 3.3% to $90,750. Meanwhile, traditional assets shuddered and the dollar is sinking.
Bitcoin’s outperformance to the Nasdaq throughout the US’s tariff crisis this year has been “striking,” said Bernstein analysts in a note to investors.
Bitcoin is down 4.3% since the start of January while the Nasdaq 100 has dropped about 14%.
A fractured correlation would have serious implications for the industry. For years, the market’s leading cryptocurrency has moved in line with tech stocks, acting as a proxy for high-risk assets.
A true decoupling would offer a new narrative, such as that proposed by Bitcoin backers who see the cryptocurrency as digital gold. That means Bitcoin is acting not as a risky tool for speculation but instead as a hedge against currency debasement, inflation, and turmoil.
“Bitcoin up big yesterday when stocks down, showing negative correlation to stocks past week or so,” Eric Balchunas, Bloomberg’s ETF expert, said on X.
“[It’s] obviously a ridiculously small time frame but gotta get these small wins if it ever wants to be considered a true alternative.”
Catching up
Bitcoin has “decoupled obviously” from the Nasdaq which “was a trend for a while,” said CNBC anchor, Scott Wapner, during Monday’s “Fast Money Halftime Report.”
But Bitcoin’s new trading pattern is something that has been taking place only recently.
In fact, earlier this month, Bitcoin was trading in tandem with stocks, “just not seeing the big pops and drops” investors are accustomed to seeing, said Tanaya Macheel of CNBC Business News.
What’s more, Bitcoin still hasn’t been able to catch up with the market’s standout performer: gold.
Gold is up 6% to $3,370.
Exhaustion
For Macheel, there’s two reasons behind Bitcoin’s price action.
“The obvious and easy narrative would be Bitcoin acting as a hedge against political uncertainty,” she said, pointing to Trump’s public intentions to remove Federal Reserve Chair Jerome Powell from his position.
But there’s a second leg.
“It’s not just enthusiasm but also exhaustion,” Macheel said. “Investors want to get back into risk, just not the type of risk that’s tied to earnings or Fed policy.”
Pedro Solimano is a markets correspondent based in Buenos Aires. Got a tip? Email him at [email protected].
