Bitcoin Taking Cue From Tech Stocks as Markets Await US CPI Test
(Bloomberg) — The correlation between bitcoin and a gauge of U.S. technology stocks hit a two-year high, indicating that the stock market’s reaction to U.S. inflation data on Wednesday could weigh on digital cues.
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The 30-day correlation coefficient for the largest cryptocurrency and the Nasdaq 100 index is around 0.70, Bloomberg data shows. A reading of 1 indicates the asset is moving in lockstep, while a minus 1 indicates an inverse correlation. :
The inflation report is expected to show sustained price pressures, just as markets worry about the possibility of further rate cuts by the Federal Reserve amid uncertainty about the impact of the strong US economy and Donald Trump’s agenda.
Bond yields and the dollar rose against that backdrop, while stocks and cryptocurrencies came under pressure.Bitcoin traded at $97,000 as of 6 a.m. Wednesday, roughly $11,300 below last month’s record high.
Trump’s inauguration
President-elect Trump will be sworn in on January 20 and could unleash a political blitz, with speculators weighing the risk of inflationary tariffs and immigration policies against his promise to make the US the global home of crypto.
“Overall interest rate sensitivity over the past month points to the importance of Wednesday’s CPI print,” K33 Research analysts Vetle Lunde and David Zimmerman wrote in a note “.
Hedging activity is picking up in the options market, signaling that investors are positioning for increased volatility, according to trading platform Derive.xyz.
Bearish bets rose, indicating “hedging of potential downside risks as we approach the inauguration,” said Sean Dawson, head of research at Derive.xyz.
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