Bitcoin’s recent move away from its usual correlation with the stock market has increased its appeal to investors as a portfolio diversifier.
A report by market analysts of digital assets has highlighted bitcoin’s divergence from its usual similarities to stock market price trends.
Its 30-day correlation with the NASDAQ is the lowest it’s been since December 2021. Currently, the world’s leading digital currency is correlating at 0.26 with the American stock exchange.
The correlation with the S&P 500 is also down, signifying bitcoin’s growing independence from market forces that dominate the stock market.
Trends such as these indicate that bitcoin is being treated as a separate asset class rather than an extension of tech stocks, as has been the case for some time.
This could suggest that bitcoin is finally being assessed on its own merits in the current meltdown of the traditional financial system.
With some of the largest bank failures in recent history and the U.S. debt ceiling yet to be raised, bitcoin is quite possibly preparing to take its place as the go-to asset for investors.
Alternatively, bitcoin may simply be returning to normal, as the correlation with the stock market was a recent phenomenon that began with the market turmoil in 2022.
In any case, its decoupling from the stock market has made it an attractive proposition for portfolio diversification, which could see an increase in demand of the digital currency.
Portfolios have traditionally performed better with a small percentage of BTC, and now that its price action is independent again, investors are likely to want to add bitcoin to their holdings.
This, along with the supply squeeze caused by the all-time highs of HODLing, could push up the price of bitcoin and kickstart a new bull run.
A variety of factors appear to be coming together at the same time, as instability in the fiat financial system combines with growing confidence in a new bitcoin bull run.
Time will tell if this turns out to be the case, but everything points to now being a good time to buy bitcoin.
