- Although Bitcoin is no longer being priced as a macro hedge or rate/inflation trade, Bitcoin’s recent correlation with U.S. software equities doesn’t mean it has become a tech-stock proxy, analysis from financial services firm NYDIG finds.
- While correlations have risen to around 0.5, the firm argues that most of bitcoin’s price movements are still driven by crypto-specific factors such as fund flows, derivatives positioning, adoption trends, and regulation.
Bitcoin’s reputation as a hedge against TradFi market turmoil is over. Its price is increasingly moving in line with risk assets in traditional markets — namely, U.S. stocks.
Bloomberg reported the 30-day correlation coefficient for BTC and the S&P 500 hit 0.74 last week, which is the highest level this year (the closer the value is to 1, the more the assets move in tandem). Bloomberg Intelligence ETF analyst Athanasios Psarofagis said, “This goes against the benefit of Bitcoin during a spike in volatility.”
However, recent analysis from financial services firm NYDIG finds that while Bitcoin is now being priced as a volatile growth asset, BTC and US software equities have not “structurally converged” and the OG crypto still has a role to play as a portfolio diversifier.
In a note released March 6, NYDIG’s Global Head of Research, Greg Cipolaro, said that despite some claims that BTC’s price is now coupled with US SaaS tech stocks, their alignment has been “overstated.”
The recent price action 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.
Greg Cipolaro, NYDIG Global Head of Research He said current buyers of Bitcoin “appear to be macro- and equity-sensitive, allocating along the risk curve, rather than capital expressing a distinct monetary thesis.”
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Cipolaro argues that the majority of BTC’s price movement remains unexplained by equities. He said:
- Correlations to IGV (iShares Expanded Tech-Software Sector ETF), the Nasdaq, and the S&P 500 have been within the 0.5 range.
- That implies an R-squared of roughly 0.25, meaning only about one-quarter of bitcoin’s moves are explained by that single equity factor.
He said the remaining 75% of drivers are unique to Bitcoin, such as asset-wide fund flows, network activity and adoption trends, trader and derivatives positioning, and regulatory and policy developments.
That differentiation supports bitcoin’s role as a portfolio diversifier. While cross-asset correlations with equities are currently elevated, they remain far from determinative of bitcoin’s returns.
Greg Cipolaro, NYDIG Global Head of Research NYDIG Weighs in on Bitcoin Sovereign Reserve Issue
In light of recent commentary from venture capitalist Chamath Palihapitiya and well-known hedge fund founder Ray Dalio, expressing doubt over Bitcoin’s role in central bank or sovereign reserves — NYDIG’s Greg Cipolaro posits that the standards by which Bitcoin is being judged have changed.
“As bitcoin evolved from a fringe alternative for individuals disillusioned with the post-GFC banking system into an institutional portfolio allocation, expectations have changed,” he said.
He said the fact that Palihapitiya and Dalio have flagged Bitcoin’s risks and structural constraints simply reflects that Bitcoin is now being evaluated as an asset within “the monetary order”.
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But Cipolaro also said that NYDIG believes central bank adoption isn’t needed to fuel Bitcoin’s growth anyway. He said Bitcoin has been “built from the edge inward” where retail investment has led its adoption curve, followed by institutional involvement — which is different to prior technological revolutions.
Central bank ownership may ultimately validate the asset class further, but it is not a prerequisite for continued growth.
Greg Cipolaro, NYDIG Global Head of Research “Bitcoin’s value comes from its globally distributed network, political neutrality, and technical and economic properties that enable censorship-resistant value transfer, digital scarcity, and independent operation free from any single government, institution, or monetary authority,” he said.
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