JPMorgan Flags High Bitcoin and Russell 2000 Correlation

JPMorgan Analysts say Bitcoin and components of the Russell 2000 index are correlated.

This correlation shares insight into linked volatility between the asset classes.

Bitcoin headwind remains, but experts see up to $116,000.

Analysts at have at the high correlation between Bitcoin and small-cap tech stocks in the Russell 2000 Index. This claim was made based on the Russell 2000 tech sector data. Before now, crypto and equity markets have maintained a correlation. However, JPMorgan analysts took it further by examining which equity sectors are most linked to crypto.

Bitcoin and Russell 2000 Index: The Correlation Catalyst

The is a US stock market index that tracks the smallest 2,000 stocks within the broader Russell 3000 Index. This index is renowned for including growth-oriented companies, offering investors exposure to potentially promising stocks. The performance of each stock is based on its market value relative to the total capitalization of the index’s shares.

This topic was analyzed and discussed after Monday’s market saw a simultaneous correction of US tech stocks and Bitcoin. These analysts, led by Managing Director Nikolaos Panigirtzoglou, acknowledged that the correlation is also present with altcoins, but Bitcoin has the highest.

They believe that the correlation of crypto to smaller tech stocks, rather than the large ones, is related to digital currencies’ reliance on venture capital. It may also be due to smaller tech companies focusing on blockchain/crypto technological innovations.

Based on the JPMorgan analysts’ opinion, the has remained structurally positive since 2020, when the pandemic hit the world.

Fluctuations of Crypto-equity Correlation

Two factors are allegedly responsible for the outlook: the role of retail investors with access to leverage in both markets and the tech-driven nature of both sectors. It is worth noting that the correlation experiences fluctuations from time. However, the peak is seen whenever the tech sector records major shifts.

For example, the correlation of BTC with equities became more pronounced in 2020 and 2024. This came at a time when the tech sector performed excellently. The same outlook was witnessed in 2022 when the industry faced sell-offs.

Therefore, “this pattern supports the idea that crypto is fundamentally linked to tech and when the tech sector is subjected to a more significant reassessment by equity investors,” the analysts wrote.

Bitcoin Price Outlook

Meanwhile, Bitcoin has rebounded, reclaiming a price level of $105,000. The coin was trading at $105,038.21, corresponding with a 2.6% increase in the last 24 hours. This outlook comes after the Federal Market Open Committee (FOMC) meeting, in which policymakers chose to keep interest rates at 4.25-4.5%.

The news has triggered global markets and Bitcoin to bullish levels, with the total crypto market cap reaching $3.5 trillion. Market experts have pegged the next price targets for the flagship cryptocurrency at $112,375 and $116,085. Institutional support for Bitcoin is on the rise and is an active catalyst to push the coin to this height.

The coin may record more jumps soon with the different talks about strategic Bitcoin reserves among corporate firms and governments.