The link between Bitcoin and leading tech shares has reached a two-year peak, signifying Bitcoin’s increasing responsiveness to broader economic influences, such as the impending U.S. Consumer Price Index (CPI) report.
On January 15th, Bitcoin (BTC) momentarily surpassed the $100,000 threshold again, according to CryptoMoon Markets Pro’s data, marking the first time it had done so since January 7th.
In other words, as Bitcoin increasingly mirrors the Nasdaq 100, it becomes more responsive to economic indicators, based on the analysis of Jag Kooner, who leads the derivatives department at Bitfinex.
Bitcoin’s link to the Nasdaq has recently hit a two-year peak, making it more responsive to today’s Consumer Price Index (CPI) figures and other economic indicators, as per his statement to CryptoMoon.
If inflation turns out to be greater than anticipated, this could lead to increased volatility in the stock market, possibly pulling down Bitcoin’s value. However, if the market responds positively, this could boost Bitcoin’s price rise,” he explained.
A day ago, the prediction was made following Bitcoin’s connection with the Nasdaq index reaching over 0.70, a level last observed in 2023 according to Bloomberg’s data. In simpler terms, this means that Bitcoin’s price movement has been closely mirroring that of the Nasdaq stock market for quite some time, and this relationship has become particularly strong recently.
Bitcoin correction mainly caused by Fed interest rate concerns
The value of Bitcoin is becoming more closely tied to events happening within the conventional financial world.
According to Ryan Lee, the current drop in Bitcoin’s price below $92,500 is mainly due to worries about the potential tightening of the Federal Reserve’s monetary policies set for 2025.
“Bitcoin’s dip stems primarily from strong US economic data pointing toward potential interest rate hikes. This development makes cryptocurrencies less attractive as investments, while the Federal Reserve’s signals of tighter monetary policy further intensify market corrections.”
Moreover, crypto prices may react to tightening monetary policy faster than traditional assets.
In simpler terms, Kooner suggested that changes in the price of Bitcoin and cryptocurrencies will likely reflect economic developments more quickly than other investment options, and they might adjust to the potential number of interest rate reductions in 2025 more swiftly compared to other risk assets.
As per recent predictions by the CME Group’s FedWatch tool, it is anticipated that the first U.S. interest rate reduction will take place on June 18, as suggested by current market expectations.
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2025-01-16 17:29