In line with the report, the 40-day correlation between Bitcoin and Nasdaq is at 0.6945, the best it has ever been.
In consequence, some analysts are starting to opine that Bitcoin won’t be the diversifier that lots of its advocates have made it to be.
Correlation may result in worth decline
One such advocate is Arthur Hayes, a co-founder of BitMEX. Hayes just lately predicted that BTC’s worth may attain as excessive as $1 million. Nonetheless, in a brand new opinion submit on Medium, he mentioned the purchase or promote argument and the present correlation between the crypto and inventory markets.
In line with Hayes, this isn’t good for crypto as a result of it’s imagined to be a hedge. He added that it will be unwise to advise shopping for crypto in preparation for a NASDAQ meltdown when the correlation between the 2 is so excessive.
Nonetheless, Hayes believes that the tech shares will drop no matter no matter occurs to crypto. He identified that the rising rates of interest plus the decline in financial development and the present world liquidity would make this inevitable.
Tech inventory dominated by few firms
Hayes additionally identified that NASDAQ has maintained its present worth ranges solely as a result of few worthwhile firms dominate the market.
Tesla, Microsoft, Google, and Apple maintain greater than 40% of the index, and their inventory efficiency has been fairly good, even when they’ve dropped beneath their earlier highs.
Primarily based on this evaluation, Hayes believes that the worst is but to come back for the crypto market as a fall in NASDAQ would additionally result in a drop within the worth of crypto belongings. He mentioned that we’d even see the worth of Bitcoin across the $30k mark within the second quarter of this yr.
Nonetheless, this may occasionally not happen if the correlation between Bitcoin and the NASDAQ index ought to drop earlier than the eventual meltdown of the NDX, in line with Hayes.