There are experts who point out that lately Bitcoin has been trading alongside sentiment around the stock market, especially in recent months, as investors adjust to the Federal Reserve’s plans to tighten financial conditions for the first time in almost two years, collects MarketWatch.
As evidence of that trend, the 100-day correlation between Bitcoin and stocks represented by the S&P 500 reached around 0.49 on Tuesday, the highest level since July 2020, according to data from the Dow Jones Market. Furthermore, the 60-day correlation between Bitcoin and S&P 500 reached 0.54, the highest since at least 2010.
Correlation, which refers to the extent to which different assets trade with each other, ranges in magnitude from -1.00 to 1.00. A positive correlation means that the assets are moving in the same direction, while a negative correlation means that they moved in the opposite direction.
Bitcoin maintained a positive correlation with the S&P and Nasdaq Composite since February 2020respectively, which means that assets have generally been moving in the same direction. It also shows an uptrend in bitcoin’s correlation with the S&P 500 and the Nasdaq Composite since August 2021.
In fact, Since early 2021, the correlation coefficient between Bitcoin and the S&P 500 or Nasdaq Composite was much higher than that between Bitcoin and gold., which is traditionally seen as a hedge against inflation. Bitcoin and gold were negatively correlated for various periods.
Analysts point out that more or less since the second half of 2021, Bitcoin has been related to the macroeconomic environment, and its rising or falling price is influenced by news about the Federal Reserve, the evolution of the coronavirus and inflation expectations, among other factors.
Source From: Ambito
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