Bitcoin's correlation with the Nasdaq 100 has reached a two-year high, indicating increased sensitivity to broader economic factors, including the upcoming Consumer Price Index (CPI) report in the US. This heightened correlation suggests Bitcoin's price movements may be influenced by the CPI data release, potentially leading to volatility.
Jag Kooner, head of derivatives at Bitfinex, highlighted the significance of this correlation, stating that Bitcoin's price could be impacted by the CPI data. A higher-than-expected inflation reading could trigger equity market volatility, potentially dragging Bitcoin lower. Conversely, a positive market reaction could support Bitcoin's upward movement.
Bitcoin's recent dip below $92,500 has been attributed to concerns about the Federal Reserve's tightening monetary policy for 2025. Ryan Lee, chief analyst at Bitget Research, explained that strong US economic data pointing towards potential interest rate hikes makes cryptocurrencies less attractive as investments, further intensifying market corrections.
The correlation between Bitcoin and the Nasdaq reached 0.70, a level not seen since 2023, according to Bloomberg data. Markets are now expecting the first US interest rate cut to occur on June 18, based on the latest estimates of the CME Group's FedWatch tool.