Data shows the Bitcoin correlation with S&P 500, and hence the stock market, has now set a new all-time high (ATH).
Bitcoin Correlation With S&P 500 Reaches New High
As pointed out by an analyst in a CryptoQuant post, the BTC correlation with the stock market is currently at an all-time high, further damaging the “safe haven” narrative.
The “Bitcoin correlation with S&P 500” is an indicator that measures how strongly the price of BTC reacts to volatility in S&P 500, as well as the direction of the response.
If the indicator’s value is greater than 0, it indicates that there is a positive correlation between crypto price and stock market. “Positive” here means that BTC moves in the same direction as S&P 500.
On the other hand, correlation values less than zero imply that BTC reacts to S&P 500’s price changes by moving in the opposite direction.
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The indicator’s values being exactly the same as zero automatically indicate that there is no correlation. Now, here is a chart that shows the trend in the S&P 500 and Bitcoin correlation since the year 2013:
The history of crypto has affected the value of the indicator. Source: CryptoQuant| Source: CryptoQuant
As you can see in the above graph, the correlation between Bitcoin and S&P 500 swung between positive and negative while remaining low for the most part of BTC’s history.
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The two assets are now strongly and positively related since the end of 2019 to early 2020. Although the 2020 COVID sell-off caused the indicator to crash, it has been steadily rising in the second half of 2021-2022.
This month, the correlation between Bitcoin and stock markets has reached a new record (ATH), of +0.5468.
Such high correlation between the assets has further put a dent on the narrative of “digital gold” as the crypto is no longer the safe haven it once was.
BTC Prices
At the time of writing, Bitcoin’s price floats around $39k, down 12% in the last seven days. In the last month, crypto’s value has risen 10%.
Below is a chart showing the change in BTC’s price over the past five days.
Source: BTCUSD on TradingView| Source: BTCUSD on TradingView
Bitcoin prices plunged recently, reaching as low as $36.4k just a few days earlier. The value of Bitcoin has seen some improvement since then and is now above $39k. At the moment, it’s unclear whether this fresh uptrend will last.
Unsplash.com featured image, Charts from TradingView.com and CryptoQuant.com charts