BTC Decoupling From US Stocks: Could a Bull Market Be Brewing?

  • The correlation between Bitcoin (BTC) and US stock prices, which reached a record high in 2022, is fading.
  • CoinMetrics reported that the 60-day Pearson correlation between BTC price and the closing price of S&P 500 fell to its lowest level since April 2022.
  • Bulls are hoping that this lower correlation, similar to the late-2018 to late-2021 period, marks the beginning of another bull market.

Record Correlation Between Bitcoin & US Stock Prices

Bitcoin’s positive correlation with US stock prices hit an all-time high in September 2022. According to CoinMetrics, the 60-day Pearson correlation between the BTC price and the closing price of the S&P 500 was 0.667 at its peak. This came after both crypto and equity prices plummeted amid concerns about inflationary pressures and a tightening response from The Federal Reserve.

Fading Correlation Could Signal Bull Market

However, this week saw this correlation drop to its lowest level since April 2022 at 0.30. This decoupling could be seen as good news for Bitcoin given it might mean that US stock market struggles are less of a headwind for crypto’s rally this year. Bitcoin is up around 35% on the year while stocks have risen by 4%. Bulls will be hoping that a lower correlation between Bitcoin and stocks signals an upcoming bull market; similar to when Bitcoin gained over 2,000% from 2018 lows just above $3,000 up to 2021 highs of $69,000.

Bear Market Impact