⭐ Merited by vapourminer (1)
Stock market correlation seems to be a relatively new phenomenon and not be valid at all for pre-2019 dates. In particular for the 2014 and 2018 Bitcoin bear markets there is no equivalent on the US stock market, so the only reason that they seem "correlated" is that both were in a long term uptrend since 2009.
The mid- to longterm correlation is indeed astonishingly high since 2019/2020, if we take let's say 3-month intervals or more.
For shorter timeframes, there seem to be phases with high correlation and others with low correlation. The first high correlation phase started in 2020 after the COVID dip and lasted till 2021, then in 2022 there was another correlation phase and another one since late 2024. Those periods with low correlation seem to be related to Bitcoin market events like the FTX crash, although 2023 is quite an anomaly as the correlation seems to be highly erratic in this year:
Source: https://newhedge.io/bitcoin/us-equities-correlation
Correlation is the blue curve at the bottom.
My guess is that since 2020 investors have become more "professional" and are looking into macroeconomic data to predict Bitcoin's price chart, and thus there can be independent variables like the Fed interest rate or economic growth in major economies which affects both Bitcoin and stocks in a similar manner. I don't remember any time before 2020 when Bitcoiners were talking about Fed interest rates or the CPI for example. Okay, they were low in the 2010s but the obsession for signals from the traditional financial market is recent.
The Trump Dump is also an example for that phenomenon, although it is also true that the intensity Bitcoin reacted with this time was lower than on other occations when it generally exaggerates market moves.
The mid- to longterm correlation is indeed astonishingly high since 2019/2020, if we take let's say 3-month intervals or more.
For shorter timeframes, there seem to be phases with high correlation and others with low correlation. The first high correlation phase started in 2020 after the COVID dip and lasted till 2021, then in 2022 there was another correlation phase and another one since late 2024. Those periods with low correlation seem to be related to Bitcoin market events like the FTX crash, although 2023 is quite an anomaly as the correlation seems to be highly erratic in this year:
Source: https://newhedge.io/bitcoin/us-equities-correlation
Correlation is the blue curve at the bottom.
My guess is that since 2020 investors have become more "professional" and are looking into macroeconomic data to predict Bitcoin's price chart, and thus there can be independent variables like the Fed interest rate or economic growth in major economies which affects both Bitcoin and stocks in a similar manner. I don't remember any time before 2020 when Bitcoiners were talking about Fed interest rates or the CPI for example. Okay, they were low in the 2010s but the obsession for signals from the traditional financial market is recent.
The Trump Dump is also an example for that phenomenon, although it is also true that the intensity Bitcoin reacted with this time was lower than on other occations when it generally exaggerates market moves.