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Topic: Bitcoin Reaches Record High Correlation to S&P 500 (Read 299 times)

legendary
Activity: 3038
Merit: 2162
that still remains an isolated incident whereas there have been other cases of other markets crashing while bitcoin not giving a shit about any of it all. nowadays it is being exaggerated in the media for FUD purposes.

It's like ETFbitcoin said - Bitcoin is not affect by markets, it's affected by large events. So far the coronavirus outbreak is the only event large enough to shake Bitcoin. But there can be and will be more in the future.

additionally if you check bitcoin behavior with other markets you can clearly see that the drop that bitcoin had was a normal size drop that is also very common in bitcoin world. meanwhile the drops that other markets had were catastrophic by their standard and extremely rare. adding the fact that bitcoin recovered as soon as the panic sell (because other markets were dumping and FUD was at its peak) ended you can see bitcoin outperformed everything else.

50% drop in a day is not common, it usually only happened when the big bubbles were popped, and while it was partially a correction from the small rally that happened at that time, the drop was still too sharp and too deep to be brushed off as a normal case of volatility. And Bitcoin didn't really outperform everything else, it's still on the level it was before the crisis, while gold is 20% up since the beginning of the year.

Also, this year's halvening might have contributed to the quick recovery, and you can't rely on that every time.

sr. member
Activity: 547
Merit: 253
Although it is a short term correlation, I think we can expect this to continue because of renewed interest after Bitcoin showed relative stability during the March crash. Bitcoin has steadily developed as an alternative investment and it is remarkable that despite little action from institutions, it is following the S&P 500 solely on the basis of retail investors.

Baby is now like "Investment of the people, for the people, by the people". Each of us, as individuals, are contributing to the overall sentiment by making independent decisions as to whether we want to hold or liquidate. I think it will be safe to assume, that for a majority of bitcoiners, there is very little external bias in their decisions now. The times of shenanigans from the likes of McAfee are, most likely, gone.

It truly is heartening to realize this. Keep going buddy..

Correlation of bitcoin and S&P for a short period of time may be observable due to reasons of our current economic situation. COVID 19 impacted all countries and most worst than that of 2008 Global Economic Crisis. As bitcoin being worstly affected, we cannot conclude yet that bitcoin will not be a safe haven asset. As to price correlation among indices and bitcoin (say that S&P strongly correlated to Bitcoin) recovery of both prices may be seen correlated as people tend to get back from their works and jobs.

According to the data provided by Coinmetric, correlation of bitcoin and S&P in long term was expected to be disappear, thus, if there are no major significant changes in the fundamentals of both markets.

Source: https://cointelegraph.com/news/bitcoin-at-risk-as-imf-warns-of-worst-downturn-in-90-years?utm_source=Telegram&utm_medium=social
legendary
Activity: 3472
Merit: 10611
Just because both of them have high correlation, that doesn't mean Bitcoin price isn't affected by S&P 500 price. It's more likely both of them affected by global event Roll Eyes

For years people in this community were telling that Bitcoin is new gold, that it's a hedge against wars, economic crashes and all the other disasters, and people really liked to post negative world news, implying that it's bullish for Bitcoin. Covid-19 crisis was the first real test for Bitcoin, and by some marks Bitcoin failed it - it crashed together with stocks and other markets, showing that it doesn't have these hedge properties. This is the real problem here, at least to people who justified their hodling with those ideas.

that still remains an isolated incident whereas there have been other cases of other markets crashing while bitcoin not giving a shit about any of it all. nowadays it is being exaggerated in the media for FUD purposes.

additionally if you check bitcoin behavior with other markets you can clearly see that the drop that bitcoin had was a normal size drop that is also very common in bitcoin world. meanwhile the drops that other markets had were catastrophic by their standard and extremely rare. adding the fact that bitcoin recovered as soon as the panic sell (because other markets were dumping and FUD was at its peak) ended you can see bitcoin outperformed everything else.
sr. member
Activity: 1470
Merit: 359
Just because both of them have high correlation, that doesn't mean Bitcoin price isn't affected by S&P 500 price. It's more likely both of them affected by global event Roll Eyes

For years people in this community were telling that Bitcoin is new gold, that it's a hedge against wars, economic crashes and all the other disasters, and people really liked to post negative world news, implying that it's bullish for Bitcoin. Covid-19 crisis was the first real test for Bitcoin, and by some marks Bitcoin failed it - it crashed together with stocks and other markets, showing that it doesn't have these hedge properties. This is the real problem here, at least to people who justified their hodling with those ideas.
It makes sense that bitcoin is not really a safe have asset, for sure we are surprised when the lockdown of economies began and we saw that most of financial instruments are crashing even the price of the bitcoin where a deep breakdown happened.

If you will say a bitcoin as a safe haven or the digital gold, make sure you that you will be prepare to its high risks because it is so volatile where everything can happen. For me, there is no correlation between the index S&P 500 and the price of the bitcoin. The index is doing higher lows and higher highs while the bitcoin is doing a sideways.
legendary
Activity: 2576
Merit: 1043
Little_Mouse Campaign Management | OrangeFren.com
Bitcoin’s strong performance from March lows has fueled demand to buy and trade bitcoin, even with the coronavirus pandemic battering the economy. Investors are increasingly looking for inflation hedges like gold or bitcoin amid aggressive expansionary monetary policy, which has also pushed equity prices higher at the same time.]
With the QE being done in some part of the world especially in US, I know that some investors want to come out of cash that is why they've invested in Bitcoin in March Lows and they saw it as an opportunity to buy and at that time too, Bitcoin halving is near to happen so it can be another reason too.

"Crypto is fully independent from financical market" they said, hah
It really is independent from the financial market and nobody is holding all of the crypto. The only factor crypto market and other market are the same is that the prices are driven by the investors which means that if a very bad thing happen and investors react on it then the market will go down like what happened months ago where even crypto market went down very hard too.
legendary
Activity: 3038
Merit: 2162
Just because both of them have high correlation, that doesn't mean Bitcoin price isn't affected by S&P 500 price. It's more likely both of them affected by global event Roll Eyes

For years people in this community were telling that Bitcoin is new gold, that it's a hedge against wars, economic crashes and all the other disasters, and people really liked to post negative world news, implying that it's bullish for Bitcoin. Covid-19 crisis was the first real test for Bitcoin, and by some marks Bitcoin failed it - it crashed together with stocks and other markets, showing that it doesn't have these hedge properties. This is the real problem here, at least to people who justified their hodling with those ideas.
copper member
Activity: 2856
Merit: 3071
https://bit.ly/387FXHi lightning theory
Yeah I think a lot of investors are just trying to get out of cash.

In theory, yes. Right now though knowing that the federal reserve are planning on distributing more stimulus money hence creating more inflation? Errr. Probably a bad idea? I'm guessing this is why gold is at it's all-time highs.

I can only call on what I know of the UK, measured inflation from the ons was at 0.14% about a month or so ago. So printing money would be reasonable to try to get it back to the 1.8% they're wanting to target.

No matter what, we'll probably see measured inflation go up next year (2-3% at least probably) , if they print as normal or extra but printing extra would provide a boost faster imo...
TGD
hero member
Activity: 1288
Merit: 620
Wen Rolex?
The human mind will work the same way whether we're talking about Gold, BTC, S&P or anything else. When something happens at a global scale, all of them will be affected. I feel like all these correlations are irrelevant in the end, because they are correlated until they aren't anymore - but nobody writes an article talking about that.

In my opinion it's not irrelevant after all. Bitcoin and S&P500 are both depends on global economy condition so it means whatever happened to Economy will impact both of them. Many investors on stocks especially S&P500 index are bitcoin holders so if ever some significant event happened economy I'm sure that investors will play safe on both investment and the best supporting evidence is when pandemic hits which brings down the price of both S&P500 and Bitcoin.

Right now the economy is starting to recover that's why both them are recovering too. They are not directly correlated but they have an indirect connect through the investors which holds both them.
legendary
Activity: 1134
Merit: 1599
The human mind will work the same way whether we're talking about Gold, BTC, S&P or anything else. When something happens at a global scale, all of them will be affected. I feel like all these correlations are irrelevant in the end, because they are correlated until they aren't anymore - but nobody writes an article talking about that.

If that's the case, then let's also use the meat stocks and BTC correlation CCN wrote about a few months ago. Funny how nowadays so many people look for literally any link between BTC and anything else. Bitcoin is independent, but does anyone really think that a globally-affected event wouldn't push/pull its price? Independent =/= outside of this Universe.
newbie
Activity: 2
Merit: 0
legendary
Activity: 3472
Merit: 10611
"Crypto is fully independent from financical market" they said, hah

and why do you think it has changed now? just because some news site said so! if you look back you can't find such news from any time before the COVID pandemic which has to tell you something about this brand new nonsense that is being spread these days and bitcoin has been around for 11 years! this FUD will continue playing for a while like all the previous ones and affect the thoughts of many but eventually vanishes too.
keep in mind that bitcoin being independent from other markets doesn't mean it is not affected by global events.
legendary
Activity: 3248
Merit: 1402
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[Bitcoin’s one-month correlation to the S&P, for example, reached a multi-year high of 0.79 on Wednesday, according to data from Skew, indicating a much stronger short-term correlation trend as levels of investor uncertainty and expected volatility remain high. Analysts expect the trend to continue and even strengthen.

Bitcoin’s strong performance from March lows has fueled demand to buy and trade bitcoin, even with the coronavirus pandemic battering the economy. Investors are increasingly looking for inflation hedges like gold or bitcoin amid aggressive expansionary monetary policy, which has also pushed equity prices higher at the same time.] Collect from Source1 Article


Analyzing something. The people who are new in the bitcoin world they say that the bitcoin is now boring. But the people who deeply know about the bitcoin. They analyze and compare with the past and then realize that bitcoin is on the right way.

Source1: https://www.coindesk.com/bitcoin-reaches-record-high-correlation-to-sp-500

Read this article 4 days ago.
Source: https://www.coindesk.com/market-wrap-as-traditional-markets-rally-bitcoin-gets-boring
I've looked that the chart of S&P 500 and compared it with Bitcoin price chart recently, and I was surprised to see such a high level of correlation. However, as you rightly pointed out, it's high right now, but it wasn't nearly the same before. Given that the pandemic is a sort of event that affects the whole world, it's not surprising that the correlation happened nowadays. However, it does not mean that Bitcoin is like stock, that Bitcoin is generally affected by the same things that affect stock or that the correlation will persist.
"Crypto is fully independent from financical market" they said, hah
It is independent of stock market or global economy in general. But it does depend heavily on the news, unfortunately, so big announcements can push people towards buying or selling BTC.
mk4
legendary
Activity: 2870
Merit: 3873
📟 t3rminal.xyz
Yeah I think a lot of investors are just trying to get out of cash.

In theory, yes. Right now though knowing that the federal reserve are planning on distributing more stimulus money hence creating more inflation? Errr. Probably a bad idea? I'm guessing this is why gold is at it's all-time highs.
full member
Activity: 924
Merit: 221
It is the interest actually that other do not have in bitcoin this is why they don't give more time to understand how to trade taking advantage on bitcoin volatility. Since we do also have different attitude towards to trading so this is why some bitcoin users will tend to lose after joining and will leave after.  But to those who enthusiast especially to those who are already in stock market then this opportunity is really good for them.
newbie
Activity: 91
Merit: 0
"Crypto is fully independent from financical market" they said, hah
hero member
Activity: 3192
Merit: 939
So Bitcoin having a high correlation ratio with a stock index is supposed to be a good thing?Why?
I think that Bitcoin and the cryptocurrency markets in general are supposed to act different than the traditional stocks markets.When the stock markets goes down,the crypto markets should go up,because the investors should be selling stocks and buying crypto.This isn't happening right now.
The people who say that Bitcoin is boring simply don't know what they are talking about.
sr. member
Activity: 2380
Merit: 366
It's funny how bored people are now making something like this. Bitcoin reaching ATH in its S&P 500 correlation? That sounds weird to me.

Correlated or not, I don't really give a damn. I am not into Bitcoin because it is a safe haven sort of whatever or something like an asset that has its own life apart from the rotten S&P 500.

legendary
Activity: 1904
Merit: 1159
Although it is a short term correlation, I think we can expect this to continue because of renewed interest after Bitcoin showed relative stability during the March crash. Bitcoin has steadily developed as an alternative investment and it is remarkable that despite little action from institutions, it is following the S&P 500 solely on the basis of retail investors.

Baby is now like "Investment of the people, for the people, by the people". Each of us, as individuals, are contributing to the overall sentiment by making independent decisions as to whether we want to hold or liquidate. I think it will be safe to assume, that for a majority of bitcoiners, there is very little external bias in their decisions now. The times of shenanigans from the likes of McAfee are, most likely, gone.

It truly is heartening to realize this. Keep going buddy..
jr. member
Activity: 42
Merit: 4
Holding cash while a market fall happens is potentially good but you cant hold it while the markets rise as you'll get left behind.

Of course. And I think that this is only the thing which all traders keep in mind and get more and profit by holding for a long time.
copper member
Activity: 2856
Merit: 3071
https://bit.ly/387FXHi lightning theory
Yeah I think a lot of investors are just trying to get out of cash.

Observed inflation will probably rise within a year or two to be fairly high (I think this is the normal trend that its lower during recessions and higher following them). Holding cash while a market fall happens is potentially good but you cant hold it while the markets rise as you'll get left behind.
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