Bitcoin’s recent parallel movement with US software stocks is more of a case of shared exposure to macro events, rather than any structural convergence, according to financial services company NYDIG.
In the past week, Bitcoin (BTC) rallied alongside US software stocks, leading many to claim the cryptocurrency was a proxy for the sector, Greg Cipolaro, the head of research at NYDIG, said in a note on Friday.
“While the visual fit of their indexed price is compelling, the conclusion that Bitcoin and software equities have structurally converged, or that they share common exposure to themes such as AI or quantum risk, is overstated,” he said.
Cipolaro added the tandem rally “more plausibly reflects shared exposure to the current macro regime, specifically long-duration, liquidity-sensitive risk assets, rather than evidence of a structural convergence between Bitcoin and software equities.”
Bitcoin’s price is “unexplained by equities”
Bitcoin’s correlation with software stocks has increased on a 90-day rolling basis since its all-time high above $126,000 in early October, but Cipolaro said its correlations with the S&P 500 and Nasdaq have also recently risen, indicating that “the change is not isolated to software stocks.”
However, even with Bitcoin’s correlations to software stocks and the two indices, “the majority of Bitcoin’s price movement remains unexplained by equities,” Cipolaro added.
He said that, statistically measured, only a quarter of Bitcoin’s price movements are explained by a correlation to the stock market, while at least 75% of its movements are affected by drivers outside traditional stock indices.
Cipolaro said it appears Bitcoin is not being priced as a hedge against macroeconomic conditions, which explains “the ongoing frustration around Bitcoin’s failure to ‘act like gold’ despite the digital gold label.”
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He added that traders appear to be allocating to assets along a risk curve, rather than buying Bitcoin for a “distinct monetary thesis.”
Cipolaro argued, however, that Bitcoin has a distinct market structure and economic drivers, pointing to its network activity and adoption trends, along with regulatory and policy developments that make it different from other assets.
“That differentiation supports bitcoin’s role as a portfolio diversifier,” he said. “While cross-asset correlations with equities are currently elevated, they remain far from determinative of bitcoin’s returns.”
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