Opinion: Oversupply leads to weaker correlation between bitcoin and U.S. tech stocks

After trading almost in sync in recent months, bitcoin's correlation with surging U.S. stocks is crumbling due to an oversupply of cryptocurrencies and a lack of demand, according to Bloomberg. On Tuesday, the 90-day correlation coefficient between bitcoin and the tech-dominated Nasdaq 100 index fell to 0.21, its lowest level since early May. In two months, the coefficient has fallen by more than 50%. A coefficient of 1 means assets move in perfect sync, while a coefficient of -1 indicates they move in the opposite direction.
Joshua Lim, co-founder of trading firm Arbelos Markets, said: "Bitcoin is being weighed down by unique supply events, including spot sales of seized coins held by the German and US governments, as well as the distribution of Mt. Gox assets. This is limiting Bitcoin's upside even as other risky assets are trading at record highs." Manuel Villegas, next generation research analyst at Julius Baer, said: "Excess supply of tokens is expected to move into centralized exchanges in the coming days, likely putting pressure on prices. The impending oversupply has been a major factor affecting market confidence."