Nasdaq 100 More Volatile than BTC in 2022 So Far
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Nasdaq 100 More Volatile than BTC in 2022 So Far

Increased volatility in equity markets may drive capital away from crypto as investors pursue higher returns.
Neither the author, Kingsley Alo, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

A curious case of turned tables that may see a seismic shift in global investment patterns seems to be occurring in 2022. Emerging reports suggest that Bitcoin has seen reduced volatility compared to tech stocks this year so far. The situation is even more alarming, as the entire crypto market is in a slump due to FUD over the Federal Reserve’s new policies.

The Nasdaq 100 was 2.4 Times More Volatile than Bitcoin in 2022 so Far

Data provided by Bloomberg shows that Bitcoin has only moved one standard deviation in either direction from its average price five times in 2022. This is compared with the tech-heavy Nasdaq 100 index, which has done so 12 times already. The last time a similar situation occurred over the previous five years was in 2020 as the pandemic onset sent shock waves across the stock market.

Source: Bloomberg

Despite having fewer trading days than Bitcoin, the Nasdaq 100 has been more volatile this year. So far, the tech-heavy index has plummeted roughly 13% in 2022, beating Bitcoin’s 8% decrease.

A mooted reason for this reversal is the growing fears about how aggressively the Federal Reserve will tighten its monetary policy. The feds have said its interest rate hike will commence in March to help combat inflation, currently at its highest in 40 years.

The report further affirms the IMF’s stance on the growing correlation between Bitcoin and stocks. It shows that Bitcoin’s 40-day correlation coefficient with the Nasdaq 100 stands near all-time highs. This invariably means that an upward surge in one of the assets would cause the other to follow suit and vice versa.

In all, the current volatility situation could see more investments flow into stocks instead of Bitcoin on the premise of higher returns. It is not new knowledge that volatility appeals to investors. The 2017 bull run was fueled primarily by this sentiment as most investors found BTC more attractive than stocks due to its volatility.

The latest slump in price has also led to investors being risk-averse when it comes to crypto investments. The January price drop saw BTC plummet over 30% from its all-time high price of $69,000. If Bitcoin cannot reclaim its high level of volatility, the entire crypto market may face a difficult period ahead.

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Bitcoin Primed For More Volatility Ahead

Several on-chain data posted across social media suggests that Bitcoin is primed to see increased volatility. However, a trigger is needed to spark the upward price movement in the digital asset that has now surpassed Meta in market capitalization.

Famous analyst, Will Clemente, tweeted his belief that with bitcoin holders hodling and illiquid supply increasing, a spark will see BTC rip off. The illiquid supply growth indicates the accumulation of Bitcoin, which recently topped a three-month high.

Other social media users share similar sentiments but have their beliefs steeped in the low balance of BTC on exchanges. This metric is currently at a three-year low, with Bitcoin proponents suggesting it is a positive for the digital asset. A Reddit user, u/Defy-Trends, made this post in the popular r/Bitcoin subreddit.

As it stands, investors may be in between two minds, especially with Bitcoins reduced volatility but positive on-chain metric. However, with the correlation between both assets at an ATH, they can be sure of benefiting from price surges in either asset. 

At the time of writing, Bitcoin traded at $42,266, noting a 0.1% price increase in 24-hours, while the Nasdaq 100 stood at $14,268.

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Do you think investors will invest more in the equities market over Bitcoin due to the reversal in volatility? Let us know your thoughts in the comments below.