Correlation Between The SP500, Bitcoin And The Crypto Market Reaches Its Peak


✍️ 9 August, 2022 - 17:54 👤 Editor: Jakub Motyka

  • The cryptocurrency market downtrend appears to be leveling off.
  • While Bitcoin is at one of its lowest points in years, the SP500 is picking up.
  • Has the correlation that has been observed for months changed?

As the cryptocurrency market begins to stabilize,investors are trading back on the SP500. Major digital assets on the blockchain, such as Bitcoin (BTC), Ethereum ( ETH), among others, have hit their lowest point in recent years. However, the picture seems to be starting to calm down and the market in general is showing signs of recovery.

At the same time, the traditional market has had a significant rebound after several weeks of decline. According to a Bloomberg article, the correlation between Bitcoin and the S&P 500 is at its highest point, reaching 0.65. Let us remember that the correlation is expressed in a range of 1; having the same direction and magnitude, at -1; having the same magnitude, in the opposite direction.

What Does It Mean That The Correlation Of The SP500 With Cryptocurrencies And Bitcoin Is Going Up?

A correlation of 0.65 between the SP500 and Bitcoin, being the most dominant cryptocurrency in the market, demonstrates a close relationship in their movements. In other words, the movements of bitcoin are similar to those of the traditional market. This is one of the highest points since 2010, year in which this parameter began to be recorded.

However, this does not mean that the downtrend is over. Currently, the macroeconomic outlook shows many catalysts that must be taken into account, such as the increase in central bank interest rates and global geopolitical tension. What happens in the coming weeks could be decisive so that Bitcoin, and the traditional and cryptocurrency market, continue their fall, or start a new bullish rally.

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Angélica Añez

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