This correlation has led some to question whether or not bitcoin is a good diversification option, as advocates have long argued that the asset's lack of correlation with other markets makes it a desirable investment.
On-chain analytics show that the absence of correlation is fading as more investors enter the market. The growing role of institutional investors in shaping market behavior has led to the mainstream adoption of cryptocurrency, causing the market to mimic established markets.
According to the Chief Business Officer of Islamic Coin, Mohammed Alkaff Alhashmi, many investors and traders view cryptocurrency similarly to tech stocks, considering both to have the potential for risk and growth. Alkaff attributes this correlation to the overlap between the tech and cryptocurrency communities, as many cryptocurrency enthusiasts are also tech-savvy.
In addition to the shared interests of these communities, blockchain initiatives that promote technological advancement and financing are also contributing to the growing correlation between bitcoin and tech stocks. For example, decentralized science (Deci) is an initiative to create a transparent and equitable Web3-based infrastructure for financing, developing, and sharing scientific information.
Factors Behind the Growing Correlation Between Bitcoin and Tech Stocks
According to Trading View, the correlation between bitcoin and tech stocks has been increasing in recent years. This trend has led some to question the value of bitcoin as a diversification option, as the asset has traditionally been seen as uncorrelated with other markets.
However, on-chain analytics suggest that the need for more correlation diminishes as more investors enter the market. The growing influence of institutional investors has led to the mainstream adoption of cryptocurrency, causing the market to behave more like established markets.
The Chief Business Officer of Islamic Coin, Mohammed Alkaff Alhashmi, attributes the growing correlation between bitcoin and tech stocks to the overlap between the tech and cryptocurrency communities. Many investors and traders view cryptocurrency in a similar way to tech stocks, considering both to have risk and growth potential.
In addition to the shared interests of these communities, blockchain initiatives that support technological advancement and financing are also contributing to the increasing correlation between bitcoin and tech stocks. For example, decentralized science (Deci) is an initiative to create a Web3-based infrastructure for financing, developing, and sharing scientific information transparently and equitably.
