The data shows that Bitcoin’s correlation with the S&P 500 and thus the stock market has set a new all-time high (ATH).
Bitcoin’s correlation with the S&P 500 hits a new high
As one analyst pointed out in a CryptoQuant post, BTC’s correlation with the stock market is currently on the rise, further undermining the “safe haven” narrative.
“Bitcoin Correlation with the S&P 500” is an indicator that measures how strongly the BTC price reacts to volatility in the S&P 500, as well as the direction of the response.
When the indicator shows values greater than zero, it means that there is a positive correlation between the stock market and the cryptocurrency price at the moment. “Positive” here means that BTC is moving in the same direction as the S&P 500.
On the other hand, correlation values less than zero imply that BTC reacts to S&P 500 price changes by moving in the opposite direction.
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Indicator values exactly equal to zero naturally mean that there is no correlation between the two assets. Now, here is a chart that shows the trend in the S&P 500 and Bitcoin correlation since the year 2013:
The indicator value throughout the history of cryptocurrencies | Source: CryptoQuant
As you can see in the chart above, the correlation between Bitcoin and the S&P 500 has fluctuated between positive and negative, although it has remained low for most of BTC’s history.
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However, since late 2019 and early 2020, the two assets have been strongly and positively correlated. During 2020, the metric has plummeted due to the COVID slowdown, but the indicator has risen sharply during the second half of 2021 and 2022 so far.
The correlation between Bitcoin and the stock market has now set a new all-time high (ATH) of +0.5468 this month.
Such a high correlation between assets further undermined the “digital gold” narrative, as cryptocurrency is no longer the safe haven it once was.
At the time of writing, Bitcoin price hovers around $39,000, down 12% over the past seven days. In the last month, the cryptocurrency has gained 10% in value.
The chart below shows the BTC price trend over the last five days.
BTC price seems to have recovered in recent days | Source: BTCUSD on TradingView
A few days ago, the price of Bitcoin dropped, reaching $36,400. Since then, the coin’s value has shown some recovery, breaking above the $39K level again today. It is currently unclear whether this new uptrend will last.