Bitcoin’s correlation with major technology stocks has surged to a two-year high, underscoring its increasing susceptibility to broader economic dynamics, particularly as anticipation builds ahead of the U.S. Consumer Price Index (CPI) report. Recent data showed Bitcoin briefly surpassed the $100,000 threshold, reflecting its volatile response to economic shifts.
Jag Kooner, Bitfinex’s head of derivatives, highlighted a significant rise in Bitcoin’s alignment with the Nasdaq 100, indicating heightened sensitivity to economic data, including the CPI. He suggested that higher-than-expected inflation could exacerbate market volatility, potentially dragging Bitcoin prices down, while a positive market response might bolster Bitcoin’s value.
This development follows a milestone where Bitcoin’s correlation with the Nasdaq index exceeded 0.70, a peak not observed since 2023, according to recent data. The primary force behind Bitcoin’s recent decrease below $92,500 seems to be linked to concerns over the Federal Reserve’s anticipated tighter monetary policies, as noted by Ryan Lee, chief analyst at Bitget Research. This trend suggests cryptocurrencies might become less appealing amid predictions of interest rate hikes rooted in robust U.S. economic data.
Furthermore, the dynamic nature of crypto prices may lead to a quicker adaptation to monetary policy changes than traditional financial assets. Kooner emphasized that Bitcoin and cryptocurrency movements could rapidly reflect the macroeconomic landscape and anticipate the number of rate cuts expected in 2025 more swiftly than other risk assets.
In line with these forecasts, market analysts anticipate the first U.S. interest rate cut to occur on June 18, according to the latest insights from the CME Group’s FedWatch tool.
