Bitcoin sees sharp decline in correlation with tech equities, Kaiko says

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The cor­re­la­tion between Bit­coin (BTC) and Nas­daq 100 reduced this month after reach­ing a record of .8 last month, accord­ing to a new Kaiko report.

While Nas­daq closed the week on a pos­i­tive note of over 7%, Bit­coin con­tin­ues to trade in the $21,000 range. But Bit­coin remains most­ly uncor­re­lat­ed to the asset it has been com­pared with on mul­ti­ple occa­sions, gold.

Source: Kaiko

The cor­re­la­tion between Bit­coin and the pre­cious met­al asset is at over 50% present­ly. But its cor­re­la­tion with the US dol­lars has been alter­nat­ing through­out the year between 0 and a neg­a­tive .6.

Bit­coin and Nas­daq 100 have had their per­for­mance cor­re­lat­ing for some time due to the increased inter­est of insti­tu­tion­al investors in cryp­to. But the recent hike in inter­ests rate and fears of reces­sions appears to have affect­ed Bit­coin more than tech equities.

Bitcoin sell-off was spot driven

Accord­ing to Kaiko, on-chain data reveals that the cur­rent cryp­to sell-off was caused by the spot traders rather than the deriv­a­tives market.

Per the report, Ethereum (ETH) and Bit­coin trad­ing vol­ume have declined since the start of the year. After peak­ing in May 2021, volatil­i­ty also start­ed reduc­ing in Sep­tem­ber 2021.

But the week­ly trad­ing vol­ume and price action have been rel­a­tive­ly sta­ble and on the same lev­els since then.

Accord­ing to the report, this shows that there has been a cal­cu­lat­ed effort by investors to de-risk their posi­tion. Thus, the decline is not due to a futures mar­ket sell-off.

Addi­tion­al­ly, the fund­ing rates on Bitcoin’s deriv­a­tives mar­kets show that the futures mar­ket wasn’t respon­si­ble for the sell-off. The fund­ing rates on BTC per­pet­u­al futures have main­tained a sta­ble trend despite the sharp price decline.

Fund­ing rates are cur­rent­ly at 0.005% above neu­tral. If the futures mar­ket were respon­si­ble for the sell-off, it would be neg­a­tive, sim­i­lar to Terra’s fail­ure last month.

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