Traders who watched Bitcoin rise alongside US software stocks last week may have drawn the wrong conclusion. According to NYDIG, a Bitcoin-focused financial services company, the visual similarities can be misleading.
Only about 25% of BTC price movements can be traced to the stock market. The remaining 75% is driven by forces unrelated to the S&P 500 or Nasdaq.
Greg Cipolo, NYDIG’s director of research, revealed this in a note Friday. His argument: The reason Bitcoin and software stocks move in the same direction is not because they are structurally linked. Both are responding to the same macro pressures – the kinds of pressures that drive investors toward or away from risky assets.
“The conclusion that Bitcoin and software stocks have structurally converged is overstated,” Cipolo wrote.
Shared macro trigger rather than common ID
The 90-day rolling correlation between software stocks and Bitcoin has risen since the cryptocurrency hit a record high above $126,000 in early October. However, Cipolaro pointed out that correlations with the S&P 500 and Nasdaq rose simultaneously.
90-Day Rolling Correlation Between Bitcoin and Major Indices. Source: NYDIG
Liquidity Sensitive Assets
These patterns suggest that the change is not limited to software stocks but is a broader phenomenon related to investors’ appetite for risk.
Data shows that both alpha cryptocurrencies and software stocks are being treated as long-term liquidity sensitive assets. When macro conditions favor risk-taking, both rise. Otherwise, both will be attacked.
A shared sensitivity to monetary conditions is what has driven the parallel movement, not a deeper connection between the two.
Image: CoinFlip.tech
The story that “Bitcoin is a technology stock” has spread before. They tend to reappear during periods when correlations are higher and assets appear to move more statically. Cipolo’s note pushes directly into that frame.
The unique drivers of cryptocurrencies keep them in their own category.
Despite the high correlation, NYDIG argues that Bitcoin has a market structure that sets it apart. Network activity, adoption trends, and policy developments all shape prices in ways that do not apply to software companies.
These factors support Bitcoin’s role as a portfolio diversifier even when correlations between assets are rising, he said.
BTCUSD trading at $67,465 on the 24-hour chart: TradingView
One of the tensions acknowledged in the note is that Bitcoin does not trade like gold. Although it has long been called “digital gold,” it is not being purchased as a hedge against economic instability, according to the report.
Traders appear to allocate this along a risk curve rather than a distinct financial belief.
Correlation with stocks has now increased. But according to NYDIG’s analysis, that’s far from the full story behind what’s driving Bitcoin’s price, and it’s not even close enough to be called a software stock.
Featured image from ION, chart from TradingView
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