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Here’s why the Nasdaq 100 and Bitcoin correlation has faded

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  • Bitcoin worth has crashed by about $6,000 from its highest level this yr.

  • Nasdaq has moved into a robust bull market due to AI.

  • The Federal Reserve will conclude its two-day assembly on Wednesday.

Nasdaq 100 and Bitcoin costs have moved in the other way in the previous few weeks. The tech-heavy Nasdaq 100 index has soared to the highest degree since April final yr. In all, it has jumped by nearly 40% from the lowest degree this yr. 

Bitcoin worth, on the different hand, has been caught at the essential help degree at $25,200. It has dropped by greater than $6,000 from its highest degree this yr. In the previous, Nasdaq 100 and Bitcoin had an in depth correlation as a result of they’re typically seen as high-risk property.

Regulatory considerations

The predominant motive why the Nasdaq 100 and Bitcoin worth correlation has faded is the ongoing crackdown in the United States. On Monday final week, the Securities and Exchange Commission (SEC) filed a serious lawsuit in opposition to Binance, the greatest firm in the business.

The company accused the firm of misleading practices, commingling funds, and providing its companies in the United States illegally. Then on Tuesday, the SEC filed a lawsuit in opposition to Coinbase, the greatest firm in the US. It accused Coinbase of itemizing unregistered securities to American clients.

The regulatory crackdown comes at a time when the crypto business has gone via a difficult interval. Last November, FTX, a serious crypto alternate filed for chapter, costing invetors billions of {dollars}. 

Crypto firms argue that the SEC and different policymakers haven’t issued clear steering about the crypto business. For instance, Coinbase questioned why the SEC allowed it to go public if it provided unlawful merchandise.

Why Nasdaq 100 index is hovering

On the different hand, the Nasdaq 100 index is hovering due to FOMO and the ongoing synthetic intelligence hype. A better have a look at the prime movers in the Nasdaq 100 index exhibits that they’ve a factor to do with AI.

Nvidia share worth has jumped by greater than 180% this yr, giving it a market cap of over $1 trillion. Tesla, which can also be investing in AI, has soared by over 110% whereas Broadcom, Amazon, and Palo Alto Networks have risen by greater than 70%.

Therefore, there’s a chance that traders are rotating from the high-risk crypto business to spend money on shares. Stocks are extensively seen as being much less dangerous than cryptocurrencies. 

Still, there’s a chance that cryptocurrencies will bounce again later this month as the regulatory considerations ease. As we’ve seen in the previous, these circumstances are inclined to take years to conclude. 

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