Bitcoin Moves Differently From US Stock Market, Correlation Weakening?

Keshav Verma

1 year ago

3 mins read

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Data shows while Bitcoin has been correlated with the US stock market for some time now, the two haven’t moved in tandem recently.

Bitcoin Correlation With US Stocks May Be Weakening As BTC Has Been Moving Differently

As pointed out by an analyst in a CryptoQuant post, BTC has gone down in the past week while stocks have made some gains.

A “correlation” between two assets (or markets) exists when both their prices follow the same general trend over a period of time.

For Bitcoin, there has been a strong correlation with the US stock market during the last couple of years or so. The reason behind the markets becoming so tied is the rise of institutional investors in the crypto.

Such investors view BTC as a risk asset and pull out of the coin as soon as there is macro uncertainty looming over the market (hence driving the crypto’s price down along with the stocks).

Here is a chart that shows the prices of Bitcoin, S&P 500, and NASDAQ over the last few years:

Looks like the assets have followed similar trends in recent times | Source: CryptoQuant

As you can see in the above graph, Bitcoin wasn’t correlated with the stock market in 2019 and early 2020, but it all changed when COVID struck.

After the black swan crash that occurred in March 2020, the price of BTC started following S&P 500 and NASDAQ.

Though, while BTC showed a same general long-term trend, the crypto continued to be much more highly volatile than the stocks.

The correlation has continued through the bear market, but the last week or so has turned out different.

While the US stock market has seen some uplift in the past 7 days, Bitcoin has instead taken a sharp plummet.

These markets showing different behavior recently could suggest the correlation between them may be reducing.

With the latest plunge, BTC has also lost the support line of the previous all-time high, something that has never happened in the previous cycles.

The quant in the post notes that this recent trend is a sign of weakness in the crypto market, which could lead to further downtrend in the near future.

BTC Price

At the time of writing, Bitcoin’s price floats around $16.5k, down 20% in the last week. Over the past month, the crypto has lost 15% 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 remained below $17k in recent days | Source: BTCUSD on TradingView

Featured image from André François McKenzie on Unsplash.com, charts from TradingView.com, CryptoQuant.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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