Bitcoin has highest correlation with Russell 2000 tech sector – JPMorgan

Bitcoin has caught yet another market correlation. According to JPMorgan analysts, BTC is most closely correlated with small-cap tech stocks. According to recent research, the largest crypto coin by market cap is closely tied to the Russell 2000 Index. 

The Russell 2000 Index tracks the smallest 2,000 companies within the broader Russell 3000 Index. Per data, this serves as a benchmark for the US stock market.

According to a JPMorgan research released on January 29, the crypto-to-Russell 2000 index correlation has become noticeable during periods of extreme market volatility.  The index has cut across significant price rallies or market sell-offs in the tech sector. 

Crypto’s fluctuating correlation with tech sector trend

According to Nikolaos Panigirtzoglou, managing director at JPMorgan, BTC  maintains the highest correlation compared to altcoins.

“The fact that crypto is more correlated with smaller rather than the largest tech  [magnificent 7] makes sense due to the crypto reliance on VC […] due to blockchain/crypto technological innovation typically being the focus of smaller rather than the largest tech companies,” Panigirtzoglou insisted.

Still, JPMorgan analysts noted that the correlation between Bitcoin and small-cap tech stocks fluctuates over time. 

In 2020, the Russell 2000 Index saw a remarkable surge, gaining over 20% for the year. During the same time, BTC rose from around $7,200 in Jan 2020 to over $28,000 by the end of the year. 

This market tendency was seen again in 2024. Russell 2000 Index saw another significant rise, gaining approximately 12% year-to-date as of mid-November. Bitcoin’s price also spiked above $100K, recording gains of over 120% in the same period, per Coingecko data.  

True to JPMorgan’s analysis, both sectors experienced the lowest of lows during periods of market corrections and price dips. 

An example of this happened in 2022. The Russell 2000 Index lost around 20% of its value. The crash was driven by fears surrounding rising interest rates and a broader market crash.

During the year’s tech stock market downturn, BTC fell from approximately $48K in January to a low of around $16,000 by November. 

Bitcoin rallies past $105,000, recovers from brief price corrections

Meanwhile, Bitcoin has recovered from its dip to $101K in the late Asian trading hours on Wednesday. Now, its price sits above $105,000 as of the time of this writing. Currently, Bitcoin’s price is trapped in a range between the $108K resistance level and the $100K support level.

BTC’s 20-day simple moving average (SMA) sits at $101,566, providing a potential support level, while the 12-day exponential moving average (EMA) is just below the current price at $102,959.

Both indicators are pushing the TradingView market summary sentiment to buy signals.

In a January 30 post on X, popular crypto analyst Satoshi Sniper explained that Bitcoin has recently broken out of a descending channel pattern and is now witnessing strong trading volumes.

He noted that the Ichimoku Cloud indicator is acting as support below the current price. To that end, both the 50-day and 100-day moving averages indicate bullish strength.

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