The conversation surrounding Bitcoin has shifted in recent years. Rather than debating whether the digital asset can survive, critics and supporters are now asking whether it could eventually serve as a reserve asset for sovereign institutions. As bitcoin matures, it is increasingly being judged by the standards applied to traditional institutional assets.

Bitcoin’s recent tendency to move in line with U.S. equities has raised questions about whether it still offers diversification benefits. However, financial services firm NYDIG argues that the cryptocurrency continues to play an important role in portfolio diversification. In a weekly market note, the firm’s global head of research, Greg Cipolaro, said correlations between bitcoin and major equity benchmarks such as the S&P 500, the Nasdaq 100, and the software-focused iShares Expanded Tech-Software Sector ETF (IGV) have risen in recent months.

That trend has prompted some market participants to argue that bitcoin is increasingly trading like a technology stock. Cipolaro, however, disagrees with that interpretation.

Even when correlations approach 0.5, equities account for only a portion of bitcoin’s price movements, he explained. Statistically, that level implies that roughly one-quarter of bitcoin’s price changes are linked to stock market dynamics, while the remaining three-quarters are influenced by factors unique to the cryptocurrency market.

Those factors include capital flows into bitcoin-focused funds, changes in derivatives positioning, shifts in network adoption and regulatory developments.

According to Cipolaro, the recent alignment between bitcoin and equities likely reflects the current macroeconomic environment rather than a permanent connection between the two asset classes. Both bitcoin and growth-oriented stocks tend to react to similar drivers, including liquidity conditions and investors’ appetite for risk.

Even so, he said the relationship does not undermine bitcoin’s diversification value. While cross-asset correlations with equities are currently elevated, they remain far from decisive in determining the cryptocurrency’s overall returns.

Bitcoin’s evolving role

NYDIG’s analysis also addressed recent remarks from high-profile investors such as Chamath Palihapitiya and Ray Dalio, whose comments have sparked renewed debate about bitcoin’s long-term prospects.

Palihapitiya, an early supporter who once described bitcoin as “Gold 2.0” in 2013, recently questioned whether the asset meets the requirements of sovereign balance sheets. Dalio has long expressed similar concerns, citing issues such as volatility, regulatory risks and potential technological threats including advances in Quantum Computing.

Cipolaro said these critiques highlight how expectations have evolved as bitcoin transitions from a retail-driven market to one increasingly shaped by institutional participation. Nevertheless, he argued that bitcoin’s future growth does not depend on central bank adoption.

Instead, the network has expanded steadily from individual users to family offices, asset managers and exchange-traded funds, a path that differs from many previous financial innovations that were initially driven by institutional capital.

While central bank ownership could eventually strengthen the legitimacy of the asset class, Cipolaro noted that it is not essential for bitcoin’s continued development.

According to the report, bitcoin’s value ultimately stems from its globally distributed network, political neutrality and technical 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.