Bitcoin’s notorious volatility has been outmatched by tech stocks as financial markets embarked on a rocky start to 2022.
According to Bloomberg data, bitcoin has moved more than one standard deviation from its average in either direction five times this year. The Nasdaq 100 index, which is heavily weighted in tech companies, has moved 12 times in the same period. A similar pattern was noticed in 2020, at the start of the pandemic.
In 2022, the Nasdaq 100 has dropped almost 13% – a bigger decline than bitcoin’s 8%. Bitcoin’s ROI outperformed leading tech stocks by as much as 12.24% as of 13 February 2022.
Earlier this month, Meta faced its worst single-day loss of 26%. Bitcoin has since been able to outperform the Facebook parent company by 46.74% in ROI.
Tesla was also on the losing end to bitcoin, which outpaced the EV maker by 18.37%. Amazon and Alphabet were both surpassed by bitcoin by 3.78% and 1.84% respectively.
Surging inflation and potentially tighter interest rates have sent shockwaves throughout both the crypto and stock market, which both anxiously await the Fed’s next moves.
Finbold believes that the anticipated interest rate hike has led to stock market and crypto market correlation.
However, the lack of volatility in bitcoin could be troubling for crypto markets.
Kraken’s head of OTC options trading Juthica Chou argues that whilst volatility has negative implications in traditional markets, wild swinging price movements is part of crypto’s appeal.
Bitcoin’s bull run in 2017 was largely driven by the dull nature of the stock market. In 2017 alone, the Nasdaq 100 saw just 11 moves of one standard deviation, compared to Bitcoin’s 92.
“Certainly as there’s opportunity in the broader market, that will take away a little bit from allocating capital to crypto,” Chou said on Bloomberg’s “QuickTake Stock” broadcast.
“At the end of the day, Bitcoin is the size of one large tech company. It’s not necessarily going to be able to produce the returns that some these larger, high-frequency firms may look at”.