Bitcoin's Nasdaq Link Weakens as Gold Correlation Strengthens

Bitcoin's correlation with tech stocks has been decreasing, moving closer to gold's territory. For years, Bitcoin has been considered 'digital gold', but its role as a store of value has evolved over time. Asset traders have grown accustomed to Bitcoin's behavior, which has traditionally mirrored that of the Nasdaq.

However, recent readings indicate that Bitcoin's 90-day correlation with the Nasdaq has fallen from above 60% to 33%. On the other hand, its correlation with gold has increased, reaching above 50% after being more detached last year. This shift suggests that the market may be treating both assets more similarly.

Despite this change, Bitcoin is still considered a higher-beta version of the trade, offering potential for upside without sacrificing scarcity and portability. Changpeng 'CZ' Zhao, founder of Binance, believes that Bitcoin could overtake gold in the next bull cycle, but notes that governments have decades of infrastructure built around gold.

According to CZ, any move to Bitcoin will be gradual due to the existing infrastructure surrounding gold. He also stated that he advises governments to build crypto reserves, with Bitcoin accounting for roughly half of the allocation. This shift in reserve asset choices could be significant, as it may lead institutions and governments to treat Bitcoin as a reserve asset in its own right.