Bitcoin’s recent performance may be under threat due to a significant slowdown among some of the biggest names in tech, known collectively as the “Magnificent 7.” These tech giants have recently experienced a dramatic drop in their growth rates, which could have repercussions for Bitcoin’s price.

Tech Giants’ Growth Takes a Hit

The Magnificent 7—consisting of Apple, Microsoft, Alphabet (Google’s parent company), Amazon, Meta Platforms (formerly Facebook), and Tesla—have all seen their market values decrease substantially. In just three weeks, these companies have collectively lost a staggering $2.3 trillion. This decline in value is a stark contrast to the robust growth these tech leaders enjoyed earlier in the year.

For instance, in the second quarter of 2024, the combined profits of these companies grew by 30% compared to the same period last year. While still positive, this growth is slower than the 51% increase reported in the first quarter of 2024 and the 57% rise in the last quarter of 2023. Predictions indicate that their growth could slow further to around 17% in the third quarter of 2024.

The Link Between Tech Stocks and Bitcoin

Bitcoin’s recent price movements have been influenced by the performance of major tech stocks. Historically, Bitcoin has shown a correlation with the S&P 500 index, which is heavily influenced by the tech sector. This means that significant changes in the tech stock market can affect Bitcoin’s value.

Currently, Bitcoin is trying to recover from a brief dip below $50,000 that occurred last week. As of August 12, Bitcoin is attempting to climb back above the $60,000 mark. However, with the tech sector experiencing a slowdown, there are concerns that Bitcoin’s recovery could be hampered.

Some analysts suggest that the decline in major tech stocks could put pressure on Bitcoin’s price. The tech stocks’ downturn could be influencing Bitcoin’s performance, especially as the broader equity market has been volatile since early August.

Current Correlation with Tech Stocks

Bitcoin’s relationship with the tech sector is complex. According to data from The Block, the Pearson Correlation between Bitcoin and the S&P 500 over the past month stands at 0.28. This indicates a weak positive correlation, meaning that while Bitcoin and tech stocks may move in similar directions, the relationship is not very strong.

Earlier in August, there was a negative correlation between tech stocks and Bitcoin, suggesting that when tech stocks declined, Bitcoin’s price tended to rise. However, this relationship flipped in June when Bitcoin and tech stocks moved more closely in sync.

Despite these fluctuations, Bitcoin is in the midst of what appears to be a bull run following its halving event in April. Historically, Bitcoin’s price tends to increase significantly after a halving, and this pattern seems to be continuing. Crypto analysts like PlanB suggest that Bitcoin may be experiencing an early bull phase, which could lead to further gains.

What to Watch For

While the slowdown in the Magnificent 7 could impact Bitcoin, other factors are also at play. Bitcoin’s post-halving bull cycle is a significant driver of its price. Analysts believe that Bitcoin might revisit higher price levels, potentially reaching around $65,000 in the near future.

Moreover, the performance of Bitcoin is influenced by a range of factors beyond just tech stocks. Market cycles, investor sentiment, and global economic conditions all play a role in shaping Bitcoin’s value. As such, while the slowdown in major tech companies might weigh on Bitcoin, its overall trajectory could still be positive.

In summary, the recent downturn among leading tech firms known as the Magnificent 7 could pose challenges for Bitcoin. However, Bitcoin’s ongoing bull cycle and other market dynamics may help counterbalance these potential setbacks. Investors should keep an eye on both tech stock performance and Bitcoin’s broader market trends as they navigate the cryptocurrency landscape.