According to BlockBeats, during the last Federal Reserve interest rate hike cycle, Bitcoin and other speculative investments plummeted due to the expectation that the rate hike would suppress risk appetite. Now, with the market once again optimistic about the potential for borrowing costs to drop quickly, supporters of the largest market cap cryptocurrency say that Bitcoin is more akin to high-growth assets like tech company stocks. This has been reflected in recent Bitcoin trading activity.
The 90-day correlation coefficient of digital currency and the tech-heavy Nasdaq 100 index reached 0.46 this week, the highest level since late August 2023. A correlation coefficient of 1 means assets move in sync, while -1 indicates they move in opposite directions. After the Federal Reserve began raising the target interest rate for overnight interbank loans in early 2022, the correlation jumped to over 0.8.
This suggests that Bitcoin's behavior is increasingly tied to that of tech stocks, which could have implications for investors looking to diversify their portfolios. The correlation between Bitcoin and tech stocks could be a sign of the cryptocurrency's maturation as an asset class, as it begins to behave more like traditional financial assets.
