Shared macro exposure, not structural convergence
Bitcoin’s recent price movements alongside US software stocks probably reflect shared exposure to broader economic conditions rather than any deep structural connection. That’s according to Greg Cipolaro, head of research at financial services firm NYDIG, who published a note on Friday addressing what he sees as an overblown narrative.
In the past week, Bitcoin rallied in tandem with software stocks, leading many observers to claim the cryptocurrency was acting as a proxy for the tech sector. But Cipolaro thinks this interpretation misses the mark. “While the visual fit of their indexed price is compelling, the conclusion that Bitcoin and software equities have structurally converged, or that they share common exposure to themes such as AI or quantum risk, is overstated,” he wrote.
Most Bitcoin price movement remains unexplained
What’s happening, perhaps, is that both asset classes are responding to the same macroeconomic environment. Cipolaro suggests the tandem rally “more plausibly reflects shared exposure to the current macro regime, specifically long-duration, liquidity-sensitive risk assets, rather than evidence of a structural convergence between Bitcoin and software equities.”
Here’s where it gets interesting. Even with Bitcoin’s correlations to software stocks rising on a 90-day rolling basis since early October, and correlations with the S&P 500 and Nasdaq also increasing recently, “the majority of Bitcoin’s price movement remains unexplained by equities.” Statistically speaking, only about a quarter of Bitcoin’s price movements can be explained by stock market correlations. The other 75% or so comes from drivers outside traditional indices.
Not acting like digital gold, but still distinct
This might explain something that’s been puzzling some market watchers. Bitcoin isn’t really behaving like a hedge against macroeconomic conditions, which accounts for “the ongoing frustration around Bitcoin’s failure to ‘act like gold’ despite the digital gold label.” Instead, traders seem to be allocating along a risk curve rather than buying Bitcoin based on a specific monetary thesis.
But Cipolaro maintains that Bitcoin still has its own distinct market structure and economic drivers. Network activity, adoption trends, regulatory developments—these factors make Bitcoin different from other assets. “That differentiation supports bitcoin’s role as a portfolio diversifier,” he noted. “While cross-asset correlations with equities are currently elevated, they remain far from determinative of bitcoin’s returns.”
So what we’re seeing might be temporary alignment rather than permanent convergence. The correlations exist, sure, but they don’t tell the whole story. Most of what moves Bitcoin’s price comes from somewhere else entirely. It’s a reminder that while Bitcoin sometimes moves with traditional markets, it still marches to its own beat more often than not.
