Latest / The Cryptocurrency Economy with Fexingo: Bitcoin, Ethereum, and Digital Money Markets / Is Crypto Still Correlated With Tech Stocks
Transcript
- Lucas: Bitcoin is basically flat on the year, give or take, and Ethereum is down about twelve percent. But the S&P 500 is up roughly six percent in the same stretch. So the old 'crypto is just a correlated risk asset' narrative — is it actually falling apart? Luna: I hear that argument a lot lately. But I'm not sure the correlation is gone. It might just be that the relationship is more nuanced than a simple daily chart. Lucas: Right. And that's what I want to dig into. Because if you look at the rolling 90-day correlation between Bitcoin and the Nasdaq, it's been bouncing around between zero point three and zero point five for most of 2026. That's not zero. But it's also not the zero point eight or nine we saw in 2020 and 2021. Luna: So it's weaker, but still there. What's driving the decoupling? Is it just that crypto has its own risk factors now, like stablecoin regulation, or something more structural? Lucas: I think it's partly structural. One big factor is that the Fed's interest on reserve balances is still at three point six five percent. That's a pretty attractive risk-free rate. So capital that might have rotated into crypto in a low-rate environment is instead sitting in money market funds. That drags on the whole risk-asset class, not just crypto. Luna: But tech stocks are also competing with that same risk-free rate. So why are they up while crypto is flat? Lucas: That's the question. And I think the answer has a lot to do with earnings. Tech companies, especially the mega-caps, are generating real cash flows. NVIDIA, for instance, is on pace to do over one hundred billion dollars in revenue this fiscal year. Crypto protocols don't have earnings in the traditional sense. So when the macro environment tightens, capital gravitates toward assets with visible cash flows. Luna: So you're saying crypto is more like a duration asset — sensitive to interest rates — whereas a company like NVIDIA has pricing power and margins that can offset rate headwinds? Lucas: Exactly. And that's why the correlation breaks down in certain regimes. When rates are stable and earnings are strong, tech can rally without crypto following. But when there's a macro shock, like a surprise inflation print, both sell off together. The relationship isn't gone, it's state-dependent. Luna: Let's look at the past week specifically. Bitcoin down one point two percent, Ethereum down one point four, Solana down about one percent. But the S&P 500 is basically flat. So this week, it's a mild negative for crypto, not a panic. Lucas: Right. And that's consistent with the idea that crypto is behaving more like a high-beta, low-correlation asset class rather than a pure mirror of tech. The 90-day correlation with the Nasdaq is around zero point four. That's meaningful, but it also means sixty percent of the movement is driven by crypto-specific factors. Luna: What about the idea that Bitcoin is digital gold? If that narrative held, we'd expect it to rally when real yields fall. But real yields have actually been rising this year, and Bitcoin hasn't sold off dramatically. So maybe there's a bit of decoupling there too. Lucas: That's a good point. The ten-year TIPS yield is up about forty basis points year-to-date. Gold is up about twelve percent. Bitcoin is flat. So Bitcoin is not behaving like gold either. It's in this weird middle ground where it's partly a risk asset, partly a monetary asset, and partly a speculative vehicle. Luna: And that ambiguity makes it hard for institutional allocators. If you're a pension fund, you want to know: is this a hedge, a growth play, or a diversifier? Right now, the answer seems to be 'it depends on the month.' Lucas: Exactly. And that uncertainty is reflected in the flows. Bitcoin ETF flows have been choppy — some weeks inflows, some weeks outflows. There's no clear conviction. Compare that to the steady inflows into tech ETFs. Institutions are voting with their dollars, and they're choosing earnings visibility over narrative. Luna: So for the retail investor listening, what's the takeaway? Should they think of crypto as a separate asset class, or just a leveraged tech bet? Lucas: I think the honest answer is: it's somewhere in between. The correlation is real but not constant. If you're building a portfolio, you can't assume crypto will zig when tech zags. But you also can't assume they'll move in lockstep. The best approach is to treat it as a high-volatility, low-correlation asset that requires active monitoring. And that's not a comfortable answer for most people. Luna: It's not comfortable, but it's honest. And honestly, if today's episode helped clarify that for even one person, that's worth a coffee. If you found value, consider supporting the show at buy me a coffee dot com slash fexingo. It's what keeps this ad-free and focused. Lucas: Yeah, we don't have sponsors, we don't run ads. Listener support is the whole model. So if this helps you think about your portfolio, that link is buy me a coffee dot com slash fexingo. Luna: Alright, back to the data. One thing I want to highlight: the fed funds rate is flat at three point six two percent, and interest on reserve balances is three point six five. That's been the story all year. No cuts, no hikes. So the macro backdrop for crypto is stable but restrictive. Lucas: And that stability is actually kind of interesting. In prior cycles, crypto rallied when the Fed was cutting. But now we're in this 'higher for longer' regime, and crypto is just treading water. It's not crashing, but it's not breaking out either. That suggests the market is waiting for a catalyst. Luna: What catalyst? A spot Ethereum ETF approval in more jurisdictions? A breakthrough in layer-two scalability? Or just a macro shift? Lucas: Probably a macro shift. Because crypto's biggest headwind right now isn't technology or regulation — it's opportunity cost. Why take the risk of a volatile asset when you can get three point six five percent risk-free? Until that changes, I think crypto remains in a trading range, with occasional spikes on news. Luna: So the correlation with tech stocks is real, but it's filtered through the lens of interest rates and earnings. And right now, that filter is favoring tech. Lucas: Exactly. And that's the key insight. The correlation isn't dead. It's just become more conditional. Investors who treat it as a simple one-to-one relationship are going to get caught off guard. Luna: Alright, Lucas. So if someone asked you 'should I buy Bitcoin as a tech hedge?' what would you say? Lucas: I'd say: don't think of it as a hedge. Think of it as a high-risk allocation that you size based on your conviction in the technology, not on its correlation with other assets. If you believe in the network, own it. But don't expect it to save you when tech sells off.