Bitcoin’s S&P 500 Correlation Hits A 17-Month High: Analysis

Bitcoin’s S&P 500 correlation reached a 17-month high while the number one cryptocurrency is establishing its connection with the equity index once again. However, some investors maintain it is a risk-off asset so let’s read more in today’s latest Bitcoin news.

Many times Bitcoin has been called “digital gold” and the world’s biggest crypto now seems to be mimicking stocks. According to the data from the crypto market info provider Arcane Research, Bitcoin’s S&P 500 correlation reached a new high and it is the highest one since October 2020 when BTC started its ascent back above $20,000. this comes right after BTC seemed to be decoupling from the traditional markets in the wake of Russia’s invasion of Ukraine. With the NASDAQ and S&P falling on the month, BTC and ETH gained 18% over the span and over the final week of February, Bitcoin’s correlation with the S&P dropped to 0.461. however, the 90-day correlation between BTC and the Index returned to 0.49 while 0 means no correlation and 1 shows a perfect correlation. The Arcane report stated:

“Bitcoin’s correlation to the S&P 500 has only been higher for five days in BTC’s history, showing that the current correlation regime is unprecedented in BTC’s history.”

This will corroborate Bank of America’s analysis from last month that BTC trades more like a risk asset and has been doing so since July while on the other hand, the correlation o gold has remained almost zero throughout the same time. The bank also doesn’t expect BTC’s price movements to change until the volatility drops. Michael Saylor who is a billionaire BTC whale and the CEO of MicroStrategy remained devoted to his digital gold thesis:

“Bitcoin is perfected gold—digital gold and it is also perfected property—digital property. People that are trading it right now without having studied it for a hundred hours, they trade it as a risk asset … but those that have taken the time to understand it, they understand it as a risk-off asset.”

However, in reality, both the stock correlation and the digital gold premise could be correct. Some analysts are arguing that the stocks are a risk-off asset and can pose as an inflation hedge.