• Bitcoin-Nasdaq 100 correlation is at the highest since 2022

• Inflation data will color expectations for US monetary policy

The correlation between Bitcoin and a gauge of US technology stocks has hit a two-year high, indicating that the equity market’s reaction to US inflation data due later Wednesday may set the tone for digital tokens.

A 30-day correlation coefficient for the largest cryptocurrency and the Nasdaq 100 Index is at about 0.70, data compiled by Bloomberg show. A reading of 1 indicates assets are moving in lockstep, while minus 1 signals an inverse tie.

The inflation report is expected to show firm price pressures just as markets fret about the Federal Reserve’s scope for further interest-rate cuts amid a robust US economy and uncertainty over the impact of Donald Trump’s agenda.

Bond yields and the dollar have risen against that backdrop, while stocks and crypto have been under pressure. Bitcoin changed hands at $97,000 as of 10:38 a.m. Wednesday in Singapore, roughly $11,400 below last month’s record high.

Trump Inauguration

President-elect Trump will be sworn in on Jan. 20 and may unleash a policy blitz. Speculators are weighing up the risk of inflationary tariff and immigration policies against his pledge to make the US the global home of crypto.

“The overall sensitivity to interest rates over the past month suggests increased importance of Wednesday’s CPI print,” K33 Research analysts Vetle Lunde and David Zimmerman wrote in a note. “Additionally, notable Trump momentum may still form in the days leading into the inauguration.”

Hedging activity is picking up in the options market, signaling that investors are positioning for increased volatility, according to trading platform Derive.xyz.

The proportion of bearish bets has climbed, pointing to “hedging against potential downside risks as we approach the inauguration,” said Derive.xyz’s Head of Research Sean Dawson.