#Bitcoin Correlation With Nasdaq Soars#

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Overview

Recently, the correlation between Bitcoin and the Nasdaq 100 index has surged to its highest level in two years, with a 30-day correlation coefficient of around 0.70. This signifies that Bitcoin's price movements are highly aligned with those of the Nasdaq 100 index. The strengthening of this correlation suggests that investors perceive Bitcoin as a risk asset, its price fluctuations closely tied to other risk assets like tech stocks. Analysts believe that the upcoming US inflation data will significantly impact the stock market, which in turn will affect Bitcoin's price. Furthermore, investors are preparing for potential market volatility around the upcoming US presidential inauguration, with hedging activity increasing in the options market.

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Analysis

The correlation between Bitcoin and the Nasdaq 100 index has reached its highest level in two years, with a 30-day correlation coefficient of around 0.70, signifying a high probability of the two moving in sync. This surge in correlation is primarily attributed to increased investor sensitivity to US inflation data and the political risks associated with the upcoming inauguration. Analysts believe the Consumer Price Index (CPI) data released on Wednesday will significantly influence the direction of digital tokens as it will reflect the future course of the Federal Reserve's monetary policy. Moreover, hedging activities in the options market indicate that investors are preparing for increased market volatility, with a rise in bearish bets reflecting their concern about potential downside risks. Overall, the soaring correlation between Bitcoin and the Nasdaq 100 index highlights the strengthening connection between digital currency markets and traditional financial markets, urging investors to closely monitor the impact of macroeconomic data and political events on the market.

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Classic Views

The correlation between Bitcoin and the Nasdaq 100 index is rising, reaching its highest level in two years.

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This correlation suggests that the stock market's reaction to US inflation data could impact Bitcoin's price.

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Investors are preparing for increased volatility and hedging against potential downside risk.

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The upcoming US presidential inauguration could have a significant impact on the market.

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