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According to research, Bitcoin and crypto assets in general have become highly correlated with technology stocks in recent months.
Bitcoin seems to have lost its property as a store of value or inflation. This is confirmed by third quarter performance, which is highly correlated with US technology stocks.
Mesari researcher Kunal Goel released a chart showing how far Bitcoin markets and tech stocks have fallen on October 4th.
In his report on Bitcoin’s performance for the third quarter, Goel said, “Bitcoin has largely lost its inflation and inflation narratives after falling 72% against ATHs.”
Crypto and technology market tandem
As the chart shows, the price of BTC and the Nasdaq 100 rebase could be almost exactly aligned from early 2022.
Since January 1, Bitcoin has fallen 57% from over $46,000 to around $20,000. Over the same 9-month period, the tech-heavy stock that weighed on the Nasdaq 100 fell 33.5% from 16,500 on Jan. 1 to below 11,000 by the end of September, according to TradingView.
Of course, Bitcoin’s losses are more severe because it is a highly volatile asset, but the peaks and troughs in the two charts are similar.
Goel in the year Hitting an all-time high of $69,000 in November 2021, Bitcoin has fallen 72% in a risk-free macro environment. “Rather than a store of value, the price action is similar to high-beta US tech equities,” he said, adding that prices continue to suffer amid the Federal Reserve’s conservative regime.
The inflation hedging narrative has taken a hit this year, exacerbated by institutional selling and traction from large crypto lending platforms, further contributing to volatility.
Even if some institutions come in, the asset must still be “mature” to a low risk level.
That said, declines of more than 70% are nothing new for Bitcoin and its brethren, as they have occurred in the previous three market cycles.
In comparison, gold prices also lost their storage as the commodity fell more than 18% from around $2,000 in Q1, 2022 to $1,630 by the end of Q3.
BTC returns $20,000
Bitcoin’s price has recovered 2.6 percent in the past 24 hours, but the asset remains heavily hedged. At press time, it was at $20,145, up 5.4% last week, according to CoinGecko.
Despite the recent decline of many fiat currencies around the world, there doesn’t seem to be a short-term end to consolidation as crypto markets remain remarkably flat.
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