Stop Believing the Wrong Things
No, Bitcoin Is Not a Runaway Version of the NASDAQ. The Data Says Otherwise
In financial markets, though blatantly false, certain assumptions remain deeply embedded in many investors' minds. Consider the idea of investing solely in stocks of your own country (ignoring most part the global investment universe, unless your are from the U.S.), the belief that bonds are risk-free (a myth long debunked, also by me), or the notion that gold isn’t a worthwhile investment because it doesn’t generate cash flows (an argument that misses the point entirely). And then there’s this stubborn misconception: “Bitcoin is nothing more than a hyper-volatile version of U.S. tech stocks and adds no diversification value to a portfolio.”
“On Steroids”
You may have seen it on X or elsewhere: the familiar line from so-called market experts, “Bitcoin is like the NASDAQ on steroids.” In other words, Bitcoin is simply a more extreme, more chaotic version of the NASDAQ index, the benchmark for U.S. technology stocks.
What these commentators typically refer to is price behavior. When the NASDAQ gains 2%, Bitcoin surges 5%. And when the NASDAQ corrects, Bitcoin falls harder. To "prove" the point, a chart is shown with two price lines, one for the NASDAQ and one for Bitcoin, moving in apparent tandem.
Correlation Matters
But that’s not how correlation works. These self-declared experts often imply that Bitcoin and the NASDAQ move in perfect sync. In reality, correlation measures the relationship between returns, not prices, of different assets. A correlation of +1 means the assets move exactly in the same direction, -1 means they move in exact opposition, and 0 implies no relationship at all.
If your goal is diversification, pairing assets that always move together does nothing for you. If Bitcoin rises when the NASDAQ rises and falls when the NASDAQ falls, there’s no diversification benefit. But if the correlation is meaningfully below 1, or ideally close to zero, you’re looking at two distinct return assets. That’s precisely what you want in a well-constructed portfolio.
A Dose of Reality
Now, look at the chart below. It plots two correlation lines: one between Bitcoin and the NASDAQ (green line), and one between high-yield corporate bonds and the NASDAQ. High-yield bonds are issued by companies with lower credit ratings, typically firms with weaker balance sheets, limited profitability, or high sensitivity to the economic cycle.
Let’s begin with Bitcoin. I examined a longer time frame to assess whether the Bitcoin–NASDAQ correlation truly hovers near 1, as is often claimed. It doesn’t. For years, the correlation between Bitcoin and the NASDAQ was close to zero, only rising more recently, and even then, it never exceeded 0.4. More importantly, the correlation is now falling again. In short, the numbers thoroughly disprove the idea that Bitcoin and the NASDAQ are tightly coupled.
Now consider the correlation between high-yield bonds and the NASDAQ, which has consistently ranged between 0.6 and 0.8. And yet, have you ever heard anyone argue that high-yield bonds are just a muted version of U.S. tech stocks? Probably not, even though that argument would make more statistical sense than equating Bitcoin with a turbocharged NASDAQ.
So forget the high-yield bonds if you want. And if you're not interested in correlation coefficients, skip the numbers altogether. But the next time someone confidently declares, “Bitcoin is like the NASDAQ on steroids,” take a moment to ask yourself: Is this someone whose opinion deserves your time?
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