Bitcoin (BTC) and Stocks: The Decoupling Event

Bitcoin and stocks show a major 'decoupling' event as the correlation between them significantly decreases. Prominent analyst Mati Greenspan highlights this shift and provides insights into the implications for investors. Learn more in this article.

Posted 10 months ago in Market Analysis

A chart showing the declining correlation between Bitcoin (BTC) and the SPX500 index.

Former senior market analyst at eToro and CEO of Quantum Economics, Mati Greenspan, has observed a major 'decoupling' event between Bitcoin (BTC) and top stocks of public companies. The correlation between the largest cryptocurrency and the SPX500 index, which tracks the prices of 500 large stocks traded on the U.S. market, has significantly decreased. Greenspan shared this insight on social media and illustrated it with a chart from CoinMetrics, showing the decline in correlation since early 2023. The Bitcoin/SPX500 correlation reached an all-time high in Q1 2022 and has been decreasing ever since. This decoupling comes after years of negative correlation between Bitcoin and stocks, with the correlation starting to grow during the 2020 crisis.

This decoupling event is significant as it indicates a shift in the relationship between Bitcoin and traditional stocks. It suggests that Bitcoin is becoming increasingly independent from the performance of the stock market. However, it is important to note that Bitcoin still maintains a correlation with Nikkei 225, the Japanese version of the SPX500 index. Additionally, earlier this year, Bitcoin also lost its correlation with gold, another hedge instrument against market volatility.

Although Greenspan did not provide a specific reason for the decoupling, he hinted that it could be associated with the bearish recession phase that Bitcoin is currently experiencing. Other analysts, such as PlanB, have also noted that the market is in an accumulation phase and expect a new bullish rally to occur in 2024-2025. Overall, this decoupling event highlights the maturation of Bitcoin as an independent asset class and its potential to provide diversification benefits for investors.

Last updated 9/18/2023, 11:26:29 AM


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