Bitcoins the recent trend to move in step with US stocks does not erase its value as a portfolio diversifier.
This is reported by the finance and infrastructure company NYDIG. In a weekly market note, Greg Cipolaro, the firm’s global head of research, said correlations between bitcoin and stock benchmarks such as the S&P 500, Nasdaq 100 and the software-heavy IGV ETF have risen in recent months.
The shift has led some market observers to argue that the cryptocurrency is now acting as a proxy for tech stocks. But Cipolaro disputes that view.
Even with correlations close to 0.5, stocks explain only a small portion of bitcoin’s movements, Cipolaro wrote. Statistically, that level means that about a quarter of price changes are driven by stock market factors, leaving the remaining three quarters tied to forces unique to the crypto market.
These forces include capital flows to bitcoin funds, shifts in derivatives positioning, network adoption trends, and regulatory developments.
Cipolaro said the recent price adjustment likely reflects the current macro backdrop rather than a structural merger between asset classes. Both bitcoin and growth stocks respond to liquidity conditions and investors’ appetite for risk.
“That differentiation supports bitcoin’s role as a portfolio diversifier,” Cipolaro wrote. “While cross-asset correlations with stocks are currently elevated, they are still far from decisive for bitcoin’s returns.”
The Evolving Role of Bitcoin
NYDIG’s memo also touched on recent comments from prominent investors. Chamath Palihapitiya and Ray Dalio have sparked debate about whether the early advocates have hit on the asset. Cipolaro argued instead that the debate has shifted from whether bitcoin could survive to whether it could serve as a reserve asset for central banks.
Palihapitiya, an early proponent who called bitcoin “Gold 2.0” back in 2013, recently questioned whether the asset fits the needs of government balance sheets.
Dalio has raised similar concerns for years, pointing to volatility, regulatory risks and long-term technological threats such as advances in quantum computing.
Cipolaro said these criticisms reflect changing expectations as bitcoin moves from a retail-driven asset to one owned by institutions. Still, he argued that bitcoin’s long-term growth does not depend on central bank adoption.
Instead, the network has expanded from individual users to family offices, asset managers and exchange-traded funds, a path that differs from many previous financial innovations that began with institutional capital.
Central bank ownership may ultimately further validate the asset class, but it is not a prerequisite for continued growth,” Cipolaro wrote.”
“Bitcoin’s value comes from its globally distributed network, political neutrality, and technical and economic properties that enable censorship-resistant value transfer, digital scarcity, and independent operation free from any single government, institution, or monetary authority,” the memo concluded.
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