Will separate from stocks and probably beat them.
Arcane research, however, recently claimed that Bitcoin is still closely tracking the stock market.
Bitcoin and Stock Market Correlation
The cryptocurrency market and conventional financial market grew more closely tied in 2020, according to Coinbase Institute Research. The crypto market has expanded rapidly since the outbreak began. It also became more and more entangled with the stock market at this time.
According to Coinbase Research, the risk profile of cryptocurrencies is remarkably similar to that of oil and technology stocks. With a beta of 2, Bitcoin and Ethereum increased their correlation with the stock market from zero in 2019 to two in 2022. An asset's level of stock market sensitivity is indicated by its beta value.
When the stock market rises or falls, Bitcoin and Ethereum also rise or fall, but by a factor of two. According to obscure study, BTC declined by 51 percent during the same time span while the tech-focused NASDAQ sank by 22 percent.
Two-thirds of the decline in crypto values during the bear market, according to Coinbase Research, can be linked to more general macroeconomic factors. Only a third of the decline was brought on by problems in the cryptocurrency sector.
How Long Before Bitcoin Separates From Technology Stocks?
According to 21Shares' State of Crypto report, the relationship between Bitcoin and stocks is merely a passing one. A 40-day correlation coefficient between BTC and NASDAQ is at its lowest point of the year, according to a recent Bloomberg analysis.
According to Edwards, who cited a Bridgewater Associates analysis, gold was the best investment during the stagflation. Many analysts think of Bitcoin as a gold-like inflation hedge. Edwards thinks that Bitcoin can replace gold and beat stocks given the current economic climate.
According to Chris Zuehlke of Cumberland, although Bitcoin does track the NASDAQ, it decouples from it when there is macroeconomic predictability.
