Bitcoin’s Correlation to Stocks Climbed Again
Although Bitcoin is often described as digital gold, its price action shows that dominant crypto is more positively correlated to stocks. The chances that Bitcoin is moving in sync with stock market prices are now the highest in 17 months.
Bitcoin’s correlation coefficient with the S&P 500 stock market index, which tracks the performance of 500 large companies listed on the US stock exchanges, reached 0.49, which is the highest level since October 2020, says data from market analytics Arcane Research.
This means that Bitcoin is almost perfectly in the middle of the scale, which measures the strength of the relative movements between dominant crypto and stocks. The values of it typically range between 0 and 1, where 0 means no correlation, and 1 indicates an extremely strong correlation.
“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,” the company stated.
Bitcoin and the United States stocks have moved together more closely during the pandemic.
They have acted quite similarly amid Russia’s war in Ukraine, regulatory uncertainty in China, and the US central bank’s recent decision to raise interest rates.
Why You Should Care
Higher correlation with stocks signals that Bitcoin is moving further from acting like gold, which is traditionally considered the safest investment asset or the “safe-haven” in times of inflation and financial uncertainty.
Shifting away from gold means that assets become riskier. Bank of America already classified Bitcoin as a risk asset. Risk assets are typically characterized as highly volatile.
Read more: https://dailycoin.com/bitcoins-correlation-to-stocks-climbed-again/
Text source: DailyCoin.com
