Bitcoin’s Tech Correlation Strengthens as AI Repricing Deepens and Financial Conditions Tighten

Discussed in today’s video:

• Sector correlations confirm Bitcoin’s growth sensitivity – Bitcoin’s rolling 90-day correlation versus the 11 iShares U.S. sector ETFs from BlackRock shows Technology in a clear lead at just under 0.60, with Consumer Discretionary a distant second near 0.47. This reinforces that BTC remains tightly linked to cyclical, growth-oriented equity segments. The recent defensive rotation in equities is therefore a marginal headwind for crypto, though insufficient on its own to explain the broader drawdown.
• Subsector dispersion has increased materially – Expanding the analysis to 27 iShares subsector ETFs reveals even greater dispersion, underscoring a less synchronized equity backdrop than much of the 2024–2025 bull phase. Software, broker-dealers, and certain digital infrastructure categories show elevated correlations with BTC, but so do semiconductors, AI-linked infrastructure, and other pro-cyclical segments. The correlation map is broad, suggesting macro positioning and liquidity dynamics are more dominant drivers than any single thematic trade.
• The AI disruption narrative is correlative, not causal – While SaaS and capital markets firms have repriced on fears that AI may compress margins or erode moats, Bitcoin’s correlation footprint extends well beyond perceived “AI losers.” That weakens the argument that AI-driven equity repricing is the primary force behind crypto weakness. AI-related flows may be a marginal contributor, but the evidence does not support it as the core driver.
• AI uncertainty may be influencing rates markets – The U.S. 10-year yield has fallen toward ~4%, reflecting anchored inflation expectations and potentially uncertainty around AI’s macro effects. In remarks today, Michael S. Barr outlined scenarios where AI could cause persistent labor displacement, raising unemployment even in an otherwise healthy economy.
• Longer-term, disruptive AI could reinforce Bitcoin’s structural case – If AI adoption proves meaningfully disruptive to labor markets, fiscal stimulus would likely result. That path implies greater structural debasement risk over time. A smooth productivity boom that resolves debt imbalances without labor dislocation remains possible, but it requires a narrow and highly benign transition. On balance, a disruptive adoption path would likely be constructive for assets like BTC and ETH.
• Volatility and financial conditions are firming – Equity volatility has trended higher, bond volatility has rebounded into the high 60s, and high-yield spreads have widened modestly. According to decomposition data from Goldman Sachs, falling Treasury yields are being offset by weaker equities and wider spreads, resulting in modest net tightening of financial conditions. Despite this backdrop, crypto has generally held in, suggesting some degree of positioning reset or seller exhaustion.
• Flows remain the key near-term variable – February 5th exhibited clear signs of capitulation, and Strategy’s mNAV expansion added marginal support to price action. However, aggregate centralized exchange spot volumes remain subdued following a brief spike around the lows. For a durable continuation, broader participation and stronger flows will be required.
• Tactical view: constructive, but not complacent – I remain constructive on near-term continuation, though I remain hesitant to declare February 5th the definitive cycle low.

Tickers in this video: BTC