The correlation between Bitcoin and the Nasdaq Composite index has reached its highest level since July 2020. Analysts from Arcane Research shared these observations.

A similar indicator (30-day moving average) between the first cryptocurrency and gold has dropped to its historic low along with the dollar – to a minimum since March 2020.

Experts explained these dynamics in anticipation of the Fed’s tightening of monetary policy. The dollar strengthened against other currencies on forecasts that other countries’ Central Banks will take less aggressive measures against inflation.

Rising borrowing costs are leading to a downward revision in the trajectory of high-tech stocks. Experts emphasized that the growth of the price relationship between bitcoin and the Nasdaq Composite index reflects that in the eyes of institutional investors, digital gold belongs to the category of risky assets. They doubted that the correlation would remain at its current highs.

Gold currently acts as a hedge against inflation, while Bitcoin ETPs are posting an outflow of funds. in the first two weeks of April AUM 9871 BTC decreased. If the current pace is maintained, the historic anti-record for July 2021 will be updated by the end of the month when investors withdraw 13,849 BTC.

The current dynamics may show the formation approaching the bottom in the medium term. Experts reminded that the negative dynamics of fund flows last summer coincided with the completion of the correction in digital gold.

Recall that Arthur Hayes, co-founder of the BitMEX exchange, predicted that Bitcoin will drop to $ 30,000 at the end of the second quarter due to the drop in the Nasdaq index.

Earlier, Galaxy Digital founder Mike Novogratz warned that the first cryptocurrency would “rise again” as soon as the Fed ceases to tighten monetary policy.