The correlation between bitcoin and big tech stocks, as indicated by the Nasdaq 100 index, is increasing. Arthur Hayes also believes that could result in a drop in price for Bitcoin and Ethereum if big tech stocks tank.
Bitcoin’s association with other markets is growing, as Bloomberg notes that the market’s biggest asset is seeing a growing correlation with big tech stocks. As the publication rightly notes, BTC prices are seeing an increasing correlation with the Nasdaq 100 index, especially since the start of the pandemic.
Bloomberg reports that the 40-day correlation between bitcoin and the Nasdaq 100 index hit 0.6945 on April 8. The closer to 1, the stronger the correlation.
The correlation casts some doubt on the idea that bitcoin is a strong choice for diversification. For years, bitcoin proponents have been touting the asset as a good investment choice because of its lack of association with other markets. However, as more investors have entered the market, that lack of correlation has been disappearing.
Since the start of the year, there has been a growing narrative about how institutional investors are determining how the market behaves. This has led to cryptocurrencies going “mainstream,” causing the market to mimic behavior one sees in traditional markets.
Some still maintain that BTC is a good asset for diversification, while also suggesting that investment bitcoin serves as an emergency fund. As the cryptocurrency’s price grows, while the former point may not stand, the latter certainly holds true. Professional investors also believe that crypto will go mainstream, which adds to its overall value.
Arthur Hayes comments on Bitcoin and big tech correlation
Former BitMEX CEO and co-founder of 100x Arthur Hayes, who often comments on market trends, also commented on the growing correlation between Bitcoin and the Nasdaq 100 index. Hayes said that if the latter tanks, so will Bitcoin and Ethereum.
Saying that the correlation was “not what we want,” Hayes states that rising interest rates, global fiat liquidity conditions, and falling economic growth would affect big tech. This, in turn, would affect BTC and ETH as the asset and big tech are growing in correlation.
Earlier this year, Hayes said that the global financial order was undergoing a transformation due to the sanctions on Russia. He believes that a new era where gold and bitcoin would dominate is arriving and that the two assets would benefit from it. He sees a move to a staggering price of $1 million for bitcoin.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.