Following the US Federal Reserve's decision to hike the rate of interest by 50 basis points and the chaos created because of that, Bitcoin, on Thursday sank as much as 7%. After a decline of 7%, Bitcoin was trading below $37,000 on Thursday.
Initially, the cryptocurrency surged after the Fed's FOMC meeting on Wednesday. It climbed by more than 3% to a high of $40,050 but eventually declined just like the stock markets.
Lately, the popular cryptocurrency, Bitcoin is behaving like a risk asset, just like stocks, as its correlation to the Nasdaq 100 increases. Year-to-date, bitcoin is down 20% while the Nasdaq 100 is down about 21%. As per the data from, Koyfin, both bitcoin and stocks have witnessed short-term highs on the same day, as well as short-term bottoms.
The correlation between bitcoin and the stock market partially negates the argument that bitcoin is not vulnerable to inflation. It can be established as inflation continues to increase to 40-year highs, bitcoin shows no signs of providing protection against the rise in everyday prices given its ongoing decline.