Bloomberg reports a rising correlation between Bitcoin and tech-heavy Nasdaq 100, hitting 0.46, the highest since August. This reflects a growing perception of Bitcoin as a growth asset, closely aligning with tech equities. Despite its volatile price and varied descriptions, Bitcoin’s recent surge, especially after the U.S. approval of spot Bitcoin ETFs, has attracted a broader investor base. Toby Winterflood of CCData notes an increased correlation with the S&P 500, challenging its store of value reputation. Following the ETF launches, Bitcoin’s price soared, marking significant year-to-date gains. Traditional investors’ interest has been piqued by these developments and the broader economic outlook, despite ongoing inflation concerns and the Federal Reserve’s stance on interest rates.

Bloomberg reports that the correlation between Bitcoin and the Nasdaq 100 index, known for its tech-heavy composition, has reached a 0.46 correlation coefficient this week, the highest since the end of August. This coefficient measures how closely two assets move together, with 1 being a perfect correlation and -1 indicating they move in opposite directions. The correlation had previously soared to over 0.8 when the Federal Reserve started increasing interest rates in early 2022, marking the highest correlation since Bitcoin became widely recognized.

Joshua Lim, the co-founder of Arbelos Markets, explained to Bloomberg that investors are increasingly treating cryptocurrency as a growth asset due to its technological innovation and ability to facilitate value transfer. This perception aligns Bitcoin more with growth-focused assets, such as technology stocks.

Despite being touted as digital gold, an inflation hedge, and a store of value, Bitcoin’s price volatility has often contradicted these labels. The U.S. approval of spot Bitcoin ETFs in January has significantly expanded its investor base.

Toby Winterflood, Chief Product Officer at CCData, mentioned to Bloomberg that Bitcoin’s correlation with the S&P 500 has also been on the rise since the start of 2024, challenging its status as a store of value. He attributes the recent price surges in Bitcoin to the success of these ETFs, which have quickly become some of the fastest-growing in history. Following the ETFs’ launch on January 11, Bitcoin’s price soared to nearly $74,000 in March before stabilizing. As of Friday, Bitcoin had increased by about 2.3% to $67,064, marking a nearly 10% rise this week. So far this year, Bitcoin has seen a 60% increase, outpacing the S&P 500’s 11.73% and the Nasdaq-100’s 12.19% gains.

Lim also noted that traditional investors have been drawn to Bitcoin due to factors such as the U.S. ETFs, its record high in March, and the halving event in April. With these events now in the past, the focus has shifted towards the broader macroeconomic landscape.

On May 15, the U.S. Bureau of Labor Statistics reported a 0.3 percent increase in the Consumer Price Index for All Urban Consumers (CPI-U) in April on a seasonally adjusted basis, following a 0.4 percent rise in March. Over the last 12 months, the all-items index has increased by 3.4 percent before seasonal adjustment. Despite these developments, Bloomberg notes that several Federal Reserve officials have suggested keeping borrowing costs high to ensure the continued decline of inflation, indicating a cautious approach to rate cuts.

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