Bitcoin’s Correlation to US Stocks Hits 20-month Lows - Here’s Why That’s Bullish for BTC

cryptonews.com:

Bitcoin’s correlation to US equity markets just fell to its lowest level in more than a year and a half. That’s according to crypto analytics firm CoinMetrics, who present a chart showing that Bitcoin’s 30-day pearson correlation between Bitcoin and the S&P 500 just fell under 0.20, its lowest level since September 2021.

That’s a big reversal from mid-2022, when Bitcoin and stocks were largely moving in lockstep and the 30-day correlation briefly surpassed 0.7.

And given the divergence in the Bitcoin price (which has been surging) and the S&P 500 (which has been languishing) in the past two weeks, that correlation will likely continue to drop.

If it falls under 0.08, it would hit a three-year low.

In 2021 and 2022, Bitcoin was largely viewed as a speculative technology/asset that ought to trade according to liquidity conditions, much like a tech stock.

That largely explains why the cryptocurrency saw such a big pump in 2020 and 2021 as the US (and global) economy was loaded with fiscal and monetary stimulus, before then pulling back aggressively in 2022 as that stimulus was pulled back on (primarily via aggressive rate hikes from major central banks).

Bitcoin’s pump of 2020/21 and dump of 2022 meant its price moved largely in tandem with that of the US tech stock sector.

But the bubblings of a financial crisis in early 2023 is putting that relationship to the test.

Rather than viewing Bitcoin as a speculative asset (like a tech stock), investors might finally be starting to view Bitcoin how its creators and proponents have wanted them to view it all along – as a safe-haven alternative to the fiat-based central bank-centered fractional reserve banking system.

The last few weeks have seen Bitcoin stake a decent claim to the title