In a surprising twist, the once-strong relationship between Bitcoin and technology stocks has faltered, leaving crypto enthusiasts disappointed as the AI craze takes center stage.
Bitcoin’s usual positive correlation with technology stocks, especially the soaring “mega tech” and growth stocks of recent weeks, has come to a sudden halt. Last week, its rolling 30-day correlation with the Nasdaq (.IXIC) reached its most negative point in six months, while its correlation with the NYSE FANG+TM index, encompassing mega tech and growth equity (.NYFANG), plunged to its lowest level in nearly four years.
As investor optimism surged over the transformative potential of artificial intelligence (AI), ChatGPT software, and advanced microchip technology, Big Tech experienced a remarkable surge. Yet, crypto, particularly Bitcoin, failed to ride the coattails of this wave. Despite reaching a peak above $31,000 in mid-April, yielding a year-to-date gain of nearly 90%, Bitcoin has now retraced to around $27,000, reducing its 2023 gains to approximately 63%.
As billions of dollars flowed into the Big Tech sector in recent weeks, Bitcoin trading volumes and demand dwindled, creating a contrasting dynamic.
Matt Weller, an analyst at StoneX, asserts that the current market climate offers little incentive to invest in Bitcoin, as the AI boom continues to thrive.
“ChatGPT embodies what crypto aspires to be—a widely adopted, instantly usable product with mass-market appeal,” Weller commented. He further added, “Crypto has lost its allure amidst this gold rush. Or perhaps, we should say, AI rush.”