Bitcoin remains a strong diversification tool for portfolios, even if it often trades similarly to tech stocks, an analyst says.

The discussion surrounding Bitcoin has evolved in recent years. Rather than questioning whether the digital asset can endure, critics and supporters alike are now debating whether it could eventually function as a sovereign reserve asset. As the cryptocurrency matures, it is increasingly being evaluated against the standards typically applied to institutional investments.

Despite its recent tendency to move alongside U.S. equities, bitcoin’s value as a portfolio diversifier remains intact, according to the financial services and infrastructure firm NYDIG. In a weekly market note, the firm’s global head of research, Greg Cipolaro, pointed out that bitcoin’s correlation with major stock benchmarks—including the S&P 500, Nasdaq 100, and the software-focused iShares Expanded Tech-Software Sector ETF (IGV)—has increased in recent months.

This alignment has led some observers to argue that bitcoin is effectively trading as a proxy for technology stocks. Cipolaro, however, disputes that interpretation. Even with correlations approaching 0.5, equities account for only a limited portion of bitcoin’s price behavior, he wrote.

From a statistical standpoint, that level of correlation implies that roughly one-quarter of bitcoin’s price movements can be attributed to stock market dynamics. The remaining three-quarters are influenced by factors unique to the cryptocurrency ecosystem.

Among those drivers are capital flows into bitcoin-focused funds, positioning in derivatives markets, trends in network adoption, and shifts in the regulatory environment. According to Cipolaro, the recent convergence between bitcoin and equities likely reflects broader macroeconomic conditions rather than a permanent overlap between the two asset classes.

Both bitcoin and growth-oriented technology stocks tend to react to similar forces, particularly global liquidity conditions and investors’ appetite for risk. Even so, the relationship does not eliminate bitcoin’s diversification benefits.

“That differentiation supports bitcoin’s role as a portfolio diversifier,” Cipolaro wrote, adding that while cross-asset correlations with equities are currently elevated, they remain far from decisive in determining bitcoin’s returns.

Bitcoin’s evolving role

The note from NYDIG also addressed recent commentary from prominent investors, including Chamath Palihapitiya and Ray Dalio, whose remarks have reignited debate over bitcoin’s long-term trajectory.

Palihapitiya, an early advocate who famously described bitcoin as “Gold 2.0” back in 2013, recently questioned whether the cryptocurrency is suitable for sovereign balance sheets. Dalio has voiced similar reservations for years, citing concerns ranging from price volatility and regulatory risks to potential technological threats such as advances in Quantum Computing.

Cipolaro argued that these critiques reflect a broader shift in expectations as bitcoin transitions from a retail-driven market to one increasingly shaped by institutional investors. Nevertheless, he maintained that bitcoin’s long-term growth does not hinge on adoption by central banks.

Instead, the asset’s ownership base has steadily broadened—from individual users to family offices, asset managers, and exchange-traded funds—an evolution that contrasts with many traditional financial innovations that began with institutional backing.

Central bank holdings could ultimately lend further credibility to the asset class, Cipolaro noted, but they are not essential for bitcoin’s continued expansion.

According to the note, bitcoin’s underlying value stems from its globally distributed network, political neutrality, and technological and economic characteristics that enable censorship-resistant value transfers, enforce digital scarcity, and allow the system to operate independently of any single government, institution, or monetary authority.