In the fluctuating and unpredictable world of cryptocurrency, one constant seemed to maintain some stability so far: the relationship between Bitcoin and the US stock market. Historically, the fluctuations of these two entities have often followed parallel paths, creating a correlation that is closely watched by traders and investors. However, winds of change seem to be blowing through this once steadfast relationship. A recent study by BlockScholes, a renowned crypto analytics firm, revealed an intriguing development: the traditional link between Bitcoin and the stock market is weakening.
Loosening of the link between bitcoin and the stock market for 90 days!
Is bitcoin shedding its traditional relationship with the stock market? We cannot say 100%. But, a recent study by BlockScholes, a crypto analytics firm, shows a loosening of that link.
Data indicate that the correlation between changes in the price of bitcoin and those of the Nasdaq and the S&P 500 is low. Over the last 90 days, these have fallen to a level close to zero.
This drop in momentum is not usual. Indeed, it is in 2021 that such an evolution is observed for the last time concerning the relationship between these assets. And, according to data from BlockScholes, this is the lowest level of variation recorded since this period.
” She [la corrélation, Ndlr] is now at the lowest level seen since July 2021, when BTC was between its two peaks in April and November. The drop in correlation came as both assets recouped losses incurred throughout last year’s tightening cycle.”said Andrew Melville, research analyst at BlockScholes.
In its proper perspective, this development is far from trivial. The decreasing correlation between Bitcoin and traditional risky assets is not just an isolated phenomenon. Rather, it reveals a fundamental shift in the way crypto traders approach the market. Now, increasing importance is given to the intrinsic dynamics of the crypto market, rather than its connection to traditional markets.
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