After roughly four years of following the Nasdaq-100 (NDX), Bitcoin has decoupled from its 40-day correlation with the index going to zero, signifying independence from the equity index strongly dominated by tech firms.

The Nasdaq-100 stock market index tracks the performance of 101 stocks in the technology, healthcare, consumer goods, services, and industrial sectors listed on the Nasdaq exchange.

Independent research and investment firm Fairlead Strategies recently published a report claiming that correlations between Bitcoin and NDX will likely remain low in the coming months.

“We think correlations for bitcoin and the NDX will likely remain low in the coming months given the opportunity for events such as a spot bitcoin ETF approval and the halving in April,” shares Katie Stockton, founder and managing partner at Fairlead Strategies.

Based on market movement from 2023, Bitcoin’s (BTC) price shifts have diverged from the patterns of traditional benchmark assets like the S&P 500 stock index and gold. Now, BTC has decoupled with the Nasdaq-100 index for the first time in four years. 

Stockton adds that risk assets “generally see lower correlations in bull markets” compared to bear markets.

Decoupling occurs when the prices of two assets or asset classes that had a historical correlation with each other start moving in different directions. This can occur when macroeconomic factors, new regulations, or technology changes affect one asset more than the linked asset.  

According to Stockton, Bitcoin is starting to trade more on its sector-specific news rather than just following wider financial market movements, effectively remaining agnostic to the NDX.

A 40-day correlation measures how in sync the movements of two assets (like stocks or tokens) have been over 40 days. It uses the Pearson correlation coefficient, ranging from -1 to 1. A coefficient of 1 signifies the assets moved perfectly in line with each other, while -1 means they moved in opposite directions. A coefficient near 0 means the assets were unrelated and their movements did not correlate within the 40 days.

Historically, the correlation between BTC and NDX has been mostly positive since early 2020. The correlation peaked at 0.8 (where 1 denotes a full positive correlation) as the crypto industry faced one of the most harrowing bear markets in 2022.

Such a correlation signals growing divergence and crypto’s independence from equity markets, showing how assets are moving out of congruence. In simple terms, this means there is a growing perception of maturity for Bitcoin as an asset class.