Data shows that Bitcoin is increasingly closely linked to the U.S. stock market as its cryptocurrency correlation with the Nasdaq hits an all-time high.
Bitcoin’s correlation with the stock market continues to grow.
According to a recent weekly report of mystical researchBTC-Nasdaq Correlation Grows With New ATH Above 0.8.
“Correlation” here is a measure of how the price of Bitcoin changes with the movement of another asset, such as a stock market stock.
A positive value for this indicator means that the asset is currently positively correlated with BTC. This means that the price of cryptocurrencies is moving in the same direction as the price of assets.
On the other hand, a negative correlation means that the price of the coin is moving and reacting in the opposite direction to the change in the asset.
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A value of 0 naturally indicates that there is no real correlation between the current BTC and a given asset.
Now, here is a chart showing the trend of the Nasdaq, S&P 500, DXY and Gold vs Bitcoin 30-day correlations over the past few years.
Looks like the coin has become increasingly tied with the stock market | Source: Arcane Research's The Weekly Update - Week 18, 2022
As you can see from the graph above, Bitcoin has reflected the stock market throughout the year, with correlations skyrocketing in recent months.
According to the report, the correlation between BTC and Nasdaq was particularly noticeable at the FOMC last week. The metric value for the index is now reaching a new ATH at around 0.8.
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The chart also shows that the correlation between cryptocurrencies and DXY and Gold has been negative in recent months.
According to the report, the increasing institutionalization of Bitcoin may be the cause of its growing correlation with the stock market.
Investors have been treating the coin as a risky asset, and as long as this mindset persists and the stock market continues to struggle, BTC will most likely be tied to the Nasdaq and the S&P 500.
Bitcoin’s price plummeted last week, dropping below $30,000 yesterday. As of this writing, the coin is trading at around $31.6 million, down 19% in the last 7 days.
Over the past month, cryptocurrencies have fallen 25% in value. The chart below shows the coin price trend over the last 5 days.
The price of BTC seems to have plunged down in the last few days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, Arcane Research