The correlation between Bitcoin and technology stocks may indicate the future of crypto prices

Halloween is the 15th anniversary of the publication of the Bitcoin White Paper, which discusses how Bitcoin will become an indispensable part of the global financial system. Since then, Bitcoin has come a long way, reaching a peak of over $65000 in November 2021. According to CoinDesk data, we have seen Bitcoin rise by 27.16% in the past month. I inquired with industry insiders about the future trends, especially compared to technology stocks.

Technology stocks vs. Bitcoin

Matthew Graham, founder and managing partner of RyzeLabs, discusses the correlation between Bitcoin prices and technology stocks. RyzeLabs invests in developers of blockchain technology. Earlier this year, with the decline of Bitcoin, technology stocks rose, but the recent disconnect has been beneficial for cryptocurrencies. What does this mean and what will we see next?

As an emerging market, the trend of the cryptocurrency market is largely driven by endogenous factors. As cryptocurrencies continue to mature and grow as an asset class, we expect their correlation with other asset classes to continue to increase over time, "Graham said.

At present, we are going through a period of decoupling, but Graham stated that this is only part of a larger trend.

In this situation, we have seen a strong rebound in oversold after several high-profile crashes last year, with the most notable being FTX, coupled with the upcoming downwind of Bitcoin (halving) and the accompanying supply side reduction

James Butterfill, research director of CoinShares, an alternative asset management company specializing in digital assets, said he expects the gap between Bitcoin and stocks to further widen in the coming months or even next year.

Since mid August 2022, Bitcoin has been delinked from stocks. Although the correlation reached a peak of 72%, compared to the Nasdaq index, it has recently plummeted to only 4% [...] The consensus revolves around expectations of sustained high interest rates. However, as the consequences of these rate hikes have begun to emerge, signs of pressure in areas such as credit defaults, rising mortgage rates, and PMI are already evident

He added that this seems to be advantageous compared to Tecoin, but unfavorable for stocks. At this critical moment in the interest rate cycle, any interest rate reduction measure is usually motivated by the intention to avoid an economic recession, which is not a hopeful sign for the stock market. On the other hand, sustained high interest rates may squeeze corporate profit margins and bring another challenge to the stock market. However, Bitcoin will definitely make a profit

On Tuesday, FTX founder Sam Bankman Fried stated in a federal court in Manhattan that he didn't know until the cryptocurrency exchange went bankrupt that $8 billion in customer funds had disappeared. In retrospect, our supervision in this area was very poor, "he said during his last day of testimony. I deeply regret not delving deeper into this matter

On Monday, federal prosecutors pointed out a discrepancy between Sam Bankman Fried's public comments and his decision when the cryptocurrency exchange collapsed last year. Assistant US prosecutor Danielle Sassoon emphasized Bankman Fried's public comments, claiming that FTX's risk management protocol makes it more secure than other encryption platforms, despite allowing its own investment arm Alameda Research to make unlimited risk bets.

According to CoinDesk data, Bitcoin has risen by 3.64% in the past seven days, with a trading price of approximately $34920.47 on Thursday. Ethereum ETHUSD also rose 1.89% during the same period, to approximately $1815.26.

This article originates from the financial industry