As the decision date of January 10th for the United States’ first spot Bitcoin ETF by the SEC approaches, expectations of approval have fueled a significant movement in the price of Bitcoin, the largest cryptocurrency. Current data reveals that the 40-day correlation between Bitcoin and Nasdaq, the world’s second-largest exchange, is now zero, indicating no relationship between the two asset classes.
Historically, the Bitcoin-Nasdaq correlation has been positive since early 2020, reaching a peak of 0.8 during the harsh bear market of 2022. The correlation’s drop to zero is primarily attributed to high expectations for the SEC’s approval of the US’s first spot Bitcoin ETF.
Asset classes like Bitcoin and Nasdaq typically have different market dynamics, participant profiles, and fundamental factors. However, correlations in financial markets can change over time and may exhibit similar movement patterns during certain periods.
A high correlation between Bitcoin and Nasdaq suggests similar or interconnected price movements, often due to common risk perceptions, investor behaviors, or economic factors affecting both assets in the same direction. This indicates a tendency for Bitcoin and Nasdaq to move together.
Conversely, a low correlation implies that Bitcoin and Nasdaq move independently or in opposite directions, reflecting different market dynamics or risk perceptions among investors for these assets.