marking a notable decoupling from AI tech stocks. In May, Bitcoin had its first negative monthly closing, decreasing by 8%, while the Nasdaq 100 continued to rally due to the growth of AI tech stocks.
The selling pressure on Bitcoin persists, causing the world’s largest cryptocurrency to slip by an additional 3% and trade below $27,000. At the time of writing, the BTC price stands at $26,795, down 3.13%, with a market capitalization of $519 billion.
Throughout the year 2023, Bitcoin has displayed a weakened correlation with technology stocks. May witnessed Bitcoin’s first negative monthly closing for the year, while the Nasdaq 100 surged by over 8% due to the excitement surrounding artificial intelligence.
Initially, Bitcoin investors enjoyed the decreased correlation with tech stocks as BTC was on a rally. However, the situation has reversed, with the odds now turning against them. The 30-day coefficient between Bitcoin and the Nasdaq 100 currently stands at approximately 0.2, compared to 0.8 in May 2022. A coefficient of 1 signifies that both assets move in lockstep, while -1 indicates opposite movement.
The rally in the Nasdaq 100 was primarily fueled by the hype around AI, with companies like Nvidia Corporation experiencing a substantial 30% surge in the past month. Conversely, the BTC price failed to break decisively above $30,000 and concluded May with an 8% decline. Nonetheless, Bitcoin’s overall gains for 2023 remain substantial at 64%.
Some analysts have begun to question the sustainability of the Nasdaq 100’s gains, given that only a few mega-cap companies have been driving this rally. Stephane Ouellette, the CEO of FRNT Financial Inc., commented on the dynamic nature of correlations in the space, emphasizing that as adoption grows and investment these changes, correlations will continue to evolve.
Furthermore, some analysts believe that Bitcoin’s decoupling from the Nasdaq could benefit the asset in the long term. The strong narrative surrounding AI in the market has served as a significant catalyst for tech stocks, allowing them to outperform leading digital assets such as Bitcoin and Ether.