Bitcoin’s performance over the last week has been quite a rollercoaster, reaching a new milestone before settling at around $105,000. Although movement has been somewhat subdued, there’s been a noticeable shift in sentiment around Bitcoin, a stark contrast from the indifferent atmosphere of early 2025.
This newfound optimism is propelling Bitcoin, the world’s leading cryptocurrency by market value, further into the spotlight of global financial markets. Recent data indicates that Bitcoin’s price is more closely linked with the U.S. stock market than ever before.
The Implications of Rising Correlation for Bitcoin and Investors
An analyst who goes by the name Darkfost shared insights on CryptoQuant, noting that Bitcoin has been moving in tandem with the U.S. stock market, specifically the NASDAQ Index, which hit an all-time high correlation with Bitcoin as of Saturday, January 25.
To unpack this, the NASDAQ Composite is a notable stock market index, tracking many stocks listed on the Nasdaq exchange. It’s right up there with the S&P 500 and the Dow Jones Industrial Average among the most watched indices in the U.S.
Darkfost pointed out that Bitcoin and the Nasdaq have shown a robust correlation through 2024 and this trend has carried over into the current year. Similarly, Bitcoin’s dance with the S&P 500 has been equally tight, although brief decouplings have occurred.
The analyst speculated that this growing correlation implies that institutional investors are increasingly viewing BTC in the same light as traditional asset classes, causing its fortunes to mirror broader market trends.
Darkfost further commented:
"Under Trump’s leadership and the possibility of rolling back regulations like SAB 121, Bitcoin could gain more acceptance as a legitimate asset class among institutional investors, potentially speeding up its adoption."
The dynamic between Bitcoin and U.S. stock markets is always compelling, offering distinct investment avenues. However, as the correlation strengthens, it might limit the diversification benefits these assets traditionally provide to investors.
A Quick Look at Bitcoin’s Price
Currently, BTC is valued at approximately $104,900, with little change over the past 24 hours.
BTC’s daily performance | Source: BTCUSDT chart on TradingView
Featured image by DALL-E, chart from TradingView
