Clara Medalie: Bitcoin and Nasdaq’s correlation is at its lowest since FTX collapse
Clara Medalie, director of research at digital assets data provider Kaiko, says Bitcoin (BTC/USD) is currently showing the least correlation with Nasdaq.
Medalie shared her market outlook during an interview with CNBC, where she highlighted Bitcoin’s latest rally in the aftermath of major shockwaves in the banking sector as crypto-friendly banks Silvergate Bank, Silicon Valley Bank (SVB) and Signature Bank collapsed.
Bitcoin’s breaks lockstep correlation with Nasdaq
Bitcoin price movement in 2022 was largely in tandem with stocks, with downward pressure catalysed by rising interest rates seeing BTC and Nasdaq highly correlated.
Earlier this year, when cryptocurrencies bounced higher amid a bear market rally, they did so alongside an upbeat stock market helped by a resurgent tech sector and anticipation that the Federal Reserve would start winding down on its interest rates hikes.
While cryptocurrencies continue to react to Fed’s monetary policies, the past month shows Bitcoin and Nasdaq haven’t been so closely linked in 2023.
According to Medalie, the current correlation between Bitcoin and the US stock index is at its lowest level since the bloodbath that followed the collapse of crypto exchange FTX in November.
“Bitcoin’s correlation with Nasdaq today is at its lowest level since the FTX collapse. With FTX, that was a pretty idiosyncratic market event and so it only briefly dipped. But it seems that actually since the start of the year we’ve seen a steady decline in this.”
The decoupling is just not with Bitcoin, but also with the entire asset class against equities, she noted, adding that cryptocurrencies suffered negativity in January and February. In the past week, the slight decorrelation has come as markets shake off the bearish sentiment, particularly from the point of view of what was largely a regulatory crackdown in the US.
The bounce for major stablecoin USD Coin (USDC) and Binance’s announcement that it would convert 1 billion Binance USD (BUSD) into Bitcoin, Ether and BNB have been positive price triggers, she added.
A look at the markets shows Bitcoin is currently holding near $25,000, down 4.5% in the past 24 hours. However, BTC price is up by 14% in the past month after a breakout to highs of $26,500 on Tuesday.
In comparison, the Nasdaq is also trading lower, roughly 1% down on the day and around -6% over the past 30 days. Year-to-date, Nasdaq is up 8.6% as of 10:30 am ET on Tuesday, while Bitcoin price has gained more than 56% in that time.
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