40-Day Correlation Drops to Zero as Bitcoin Emerges as a Standalone Asset
Bitcoin (BTC) has successfully broken free from its historical correlation with Nasdaq (NDX), signaling a significant shift in their relationship. The 40-day correlation between Bitcoin and Nasdaq has now dropped to zero, indicating a notable divergence between the two asset classes, according to data analyzed by research provider Fairlead Strategies.
Historically, Bitcoin and Nasdaq have moved in tandem, particularly over the past four years. The correlation value, determined mathematically based on the index and BTC’s price movements, has consistently shown a positive relationship since early 2020. However, the correlation peaked at 0.8 during the 2022 crypto bear market.
The recent decoupling is attributed to the crypto market’s singular focus on the anticipated launch of a spot Bitcoin ETF in the U.S. Since October, market participants have closely watched developments related to nearly a dozen spot ETF applications, with the Securities and Exchange Commission (SEC) expected to make decisions by January 10. A positive decision could pave the way for widespread adoption of Bitcoin as an asset class.
This shift in correlation also positions Bitcoin as a potential portfolio diversifier. Fairlead Strategies foresees Bitcoin maintaining its independence from Nasdaq for the foreseeable future. The analysts at Fairlead, led by founder and managing partner Katie Stockton, stated in a note to clients that they anticipate low correlations between Bitcoin and the NDX in the coming months, driven by events such as potential spot Bitcoin ETF approval and the scheduled halving in April. This further establishes Bitcoin’s evolving role in the investment landscape as it becomes less tethered to traditional financial markets.