Data shows that Bitcoin’s correlation with the Nasdaq has continued to be negative since December. Here’s what this means for cryptocurrency.
Bitcoin’s 60-day correlation with the Nasdaq 100 is negative at the moment
In new mail On X, the analytics company Kaiko Discuss what the trend has looked like in the relationship between BTC and Nasdaq recently. “Correlation” here refers to a measure that tracks how closely the prices of two goods relate to each other over a given period.
It is normal for this period to be of any length, but in the context of the current topic, a 60-day correlation is interesting. This version of the indicator measures the extent to which prices depend on each other over the past two months.
When the value of this measure is greater than zero, it means that the price of one asset was reacting to another by moving in the same direction. The closer the index is to one, the stronger this relationship is.
On the other hand, values below zero indicate some correlation between the two assets, but it was negative. This means that the assets have interacted with each other by moving in the opposite direction. In this case, the maximum point is -1, so the closer the indicator is to this mark, the stronger the correlation between prices.
Finally, a correlation of exactly zero means that there is no correlation at all between the two assets. In mathematics, such a situation occurs when there are two independent variables.
Now, here’s a chart showing the trend in the 60-day correlation between Bitcoin and the Nasdaq 100 over the past year:
The value of the metric appears to have taken a plunge in recent weeks | Source: Kaiko on X
As the chart above shows, the 60-day correlation between Bitcoin and Nasdaq is shown in percentage terms here, with 100% corresponding to a value of 1.
From the chart, it appears that the value of the measure was in an overall gradual decline throughout 2023, until the last two months of the year, when the measure fell particularly sharply.
There was some amount of positive correlation between the two assets before this decline, but afterward, the 60-day correlation moved to negative values. However, the indicator remained close to the 0% mark, meaning that the relationship between the two was only slightly negative.
The correlation had started to rise and reached near 0% briefly earlier, but the metric has since fallen again and assumed slight negative values.
BTC appears to have started 2024 on a low note, moving against traditional markets, which could pave the way for the cryptocurrency to move forward and explore its territory this year.
Bitcoin price
At the time of writing, Bitcoin is trading at $44,800, up more than 5% over the past week.
Looks like the price of the coin has shot up over the past day | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, charts from TradingView.com, Kaiko.com