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Is Bitcoin's Fate Dependent on Small Technology Companies? JPMorgan Announced! - Coin Bulletin
JPMorgan analysts have thoroughly examined the correlation between Bitcoin and stock markets, and found that cryptocurrencies are most closely linked to small-cap technology stocks.
Especially the Russell 2000 technology sector index has been among the stocks showing the highest correlation with Bitcoin price movements.
The team led by Nikolaos Panigirtzoglou, managing director at JPMorgan, stated in their report published on Wednesday that Bitcoin and altcoins show a stronger relationship with small-cap technology stocks. According to analysts, the dependence of the crypto market on venture capital and the fact that blockchain technology is generally developed by small companies rather than large tech giants make this correlation logical.
The Russell 2000 Index stands out as a market index that tracks the smallest 2,000 stocks in the United States. According to JPMorgan's analysis, the relationship between crypto and technology stocks has structurally remained positive in the post-pandemic period. There are two main reasons for this: the ability of retail investors to use leverage in both crypto and stocks, and both sectors being technology-focused.
Furthermore, the correlation between Bitcoin and the stock markets fluctuates over time and peaks with major changes in the technology sector. For example, during years when technology stocks are strong, such as 2020 and 2024, or during major selling waves like in 2022, the correlation between Bitcoin and stocks becomes more pronounced. The JPMorgan report emphasized that Bitcoin is fundamentally linked to the technology sector and is more affected by the reevaluation of the technology sector by stock investors.