Data shows the correlation of Bitcoin with the S&P 500, which is why the stock market has now set a new all-time high (ATH).
Bitcoin Correlation With S&P 500 Reaches New High
As indicated by an analyst at CryptoQuant postthe BTC correlation with the stock market is currently at an all-time high, further damaging the story of a “safe haven”.
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.
When the indicator has values greater than zero, it means that there is a positive correlation between the stock market and the price of the cryptocurrency at present. “Positive” here means that BTC is moving in the same direction as the S&P 500.
On the other hand, correlation values below zero imply that BTC is reacting to the S&P 500 price changes by moving in the opposite direction.
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Values of the indicator exactly equal to zero naturally mean that there is no correlation between the two assets. Now, here’s a chart showing the trend in the correlation between the S&P 500 and Bitcoin since 2013:
The indicator's value over the history of the crypto | Source: CryptoQuant
As you can see in the chart above, the correlation between Bitcoin and S&P 500 has fluctuated between positive and negative while remaining low for most of BTC’s history.
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However, since late 2019 beginning of 2020, the two assets have become strongly, positively correlated. During 2020, the metric had a crash due to the liquidation of COVID, 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 has further put a dent in the story of “digital gold,” as the crypt is no longer the safe haven it once was.
At the time of writing, the price of Bitcoin is floating around $ 39k, down 12% in the last seven days. Over the past month, the crypto has gained 10% in value.
The chart below shows the trend in the price of BTC over the last five days.
BTC's price seems to made some recovery over the last couple of days | Source: BTCUSD on TradingView
A few days ago, the price of Bitcoin plunged down, touching up to $ 36.4k. Since then, the value of the currency has shown some recovery, breaking above the $ 39k level again today. At present, it is unclear whether this recent rise will continue.
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com