Bitcoin's Price Tied to Tech Stocks, Faces 30% Volatility

Standard Chartered's head of digital assets research, Geoffrey Kendrick, has suggested that Bitcoin (BTC) may require sovereign accumulation or improved geopolitical clarity to push higher amidst the current risk-off market sentiment. This comes as Bitcoin's recent price action has been closely tied to broader market trends, particularly the performance of major US tech stocks.

Kendrick noted that Bitcoin's crash this week brought its price levels close to those seen on November 6, 2024, the day after the US presidential election. The flagship cryptocurrency hit a four-month low of $76,500 on March 10 before attempting a recovery above $80,000. Its 30-day implied volatility hovered around 55%, indicating significant market uncertainty.

The recent sell-off in Bitcoin has mirrored the performance of major US tech stocks, which have also struggled against rising macroeconomic concerns. Kendrick compared Bitcoin's performance to that of the so-called "Magnificent 7" tech stocks, including Apple, Microsoft, Nvidia, Alphabet, Meta, Tesla, and Amazon. These stocks have seen sell-offs amid market uncertainty, reinforcing the argument that broader risk asset sentiment is a key driver of price movements.

Since the inauguration of the current US administration, Bitcoin has tracked these stocks on a volatility-adjusted basis. Tesla, Meta, and Apple have been the closest equity counterparts to Bitcoin in terms of adjusted performance, suggesting that Bitcoin's price action is more reflective of widespread risk-off sentiment rather than asset-specific challenges.

Kendrick highlighted that Bitcoin continues to face further downside risk in the short term due to macro uncertainties and needs a major catalyst to resume its uptrend. He posed the question: "Which comes first: a recovery in risk assets or positive Bitcoin-specific news, such as sovereign buying from the US or other nations?"

The prospect of Federal Reserve rate cuts remains crucial. A faster-than-expected shift in policy, potentially at the Fed’s May meeting, could stabilize risk markets. Current market expectations for a May rate cut have risen, increasing the likelihood of a policy shift that could benefit Bitcoin.

In the near term, Kendrick suggested that Bitcoin could fall below the November 6 price range, indicating the potential for further downside. However, he reaffirmed his long-term bullish stance, maintaining his previous target of $200,000