Data Shows Bitcoin Still Highly Correlated With Stock Market
Data shows the Bitcoin correlation with the stock market has been high in recent months as the crypto has been closely following S&P 500 and NASDAQ.
Bitcoin Has Continued To Mimic Movements Of The US Stock Market In 2022
As per the latest weekly report from Arcane Research, while BTC has been more volatile than the stock market, the crypto’s movements have still been pretty close to the latter.
In the year 2022 so far, both the stock market and Bitcoin have found it hard. However, year-to-date, BTC is down 51% while S&P is 14% and NASDAQ 22% into the red, much less than BTC’s losses.
Here is a chart that shows how these assets have fared against each other, and gold, in the first seven months of this year:
Looks like Gold has been the strongest out of these assets during the period | Source: Arcane Research's The Weekly Update - Week 30, 2022
As you can see in the above graph, Bitcoin’s movements during the year so far have been all very similar to those of S&P 500 and NASDAQ.
Though, it’s also apparent from the chart that many of BTC’s price moves have been much bigger in scale than those of the stock market assets.
From this, it can be concluded that the correlation between the crypto and the stock markets has been pretty significant this year.
The main reason behind the highly correlated markets is the increased presence of institutional investors in Bitcoin.
During times of macro uncertainties, such investors aim to turn down their risk and thus pull out of markets like BTC. The ever-increasing inflation has been one of the recent events behind the crypto observing decline with the stock market.
The report notes that the rising significance of monetary and fiscal policy has also strengthened the correlation between not only BTC and the stock market, but also most other financial assets.
Interestingly, Gold has weathered the year the best out of the assets in question, seeing only a 4% drawdown over these first seven months.
At the time of writing, Bitcoin’s price floats around $23.1k, down 3% in the last seven days. Over the past month, the crypto has gained 14% in value.
The below chart shows the trend in the price of the coin over the last five days.
The value of the crypto seems to have been moving sideways during the last few days | Source: BTCUSD on TradingView
In recent days, Bitcoin hasn’t shown much price movement as the crypto has mostly been consolidating sideways around the $23k level.
Featured image from Quantitatives on Unsplash.com, charts from TradingView.com, Arcane Research