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[Symmetrick]

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[ChiBitCTy]

That’s of course something I’ve started to notice as well but it’s not nearly enough time for us to get our hopes up. Let’s not fool ourselves, if we have another 2008 type market crash then bitcoin (and especially altcoins ) will without question get blasted right along with it.  I think it’s going to take years for this to correct itself.

[BookFlower099]

Bitcoin Investors Struggling
Even with the recent price recovery, the profitability of bitcoin has been at the worst levels since 2020. What has happened has been both a mixture of declining prices over a number of months and newer investors who got in at higher prices being left with bags of losses. As a result, the profitability has now touched levels that it has not seen since May 2020.

Whale Activity Grows
Even with the profitability at two-year lows, it has not stopped whale activity on the network. The number of large transaction activity had grown significantly in the last two days, rising more than 40% from Sunday to be sitting at 19.62K large transactions that have been carried out in the last 24 hours.

Source: https://bitcoinist.com/bitcoin-profitability-touches-two-year-lows/

[Poker Player]

Historical correlation? I don't see it.

I follow the S&P which is the benchmark for the US stock market for many years and I have been following Bitcoin for a few years now as well. In some cases they move together, like markets in general, but I don't see the long term correlation. In the graph you show, I see that it is only 3 months.

Although there are many people who buy the Bitcoin as an investment, and that brings the parallel price to other markets, there are features that make the Bitcoin unique and therefore goes beyond, so I would not speak of long-term correlation, otherwise it is not understood that it has gone from being worth nothing to the current price, the market downturn that occurred with the crisis of miners in China or the Bear market that began in January 2018 that in the American stock market was a simple sideways, to give you some examples.

[pooya87]

For the past 2 or 3 years from time to time newbies also known as weak hands panic sell their bitcoins whenever there is a stock market dump but that has never been any correlations between bitcoin and any other markets.
Bitcoin is still the alternative to the traditional markets so that whenever those dump people have a safe haven.

Here is how the charts look between July and November 2021:

[tranthidung]

A biggest factor to support a differentiation between Bitcoin and traditional markets is hyper-inflationary speed from FED and other central banks globally. They don't stop money printing and with CBDCs are coming, they will compromise the advantage of blockchain technology to make their money printing (in future it will be money minting) easiest than ever before.

Another factor is global adoption for Bitcoin which will be increased by better knowledge and awareness about blockchain technology, Bitcoin and so on.

The differentiation will increase dramatically in future.

[davis196]

We can't draw conclusions based on a 2-3 months time frame, when it comes to making a proper analysis about the correlation between stocks markets and the crypto markets. We need at least several years of historical data.
There is no doubt that a huge wave of panic struck both the crypto and stock markets in the previous month. The war in Ukraine, the Federal Reserve announcing that interest rates will go up, the rising food and fuel prices.
All those factors influenced the crypto markets as well, plus the Luna collapse.
The crypto and the stocks markets are influenced by the same factors, that's why they are following the same bearish trend.
I don't think that this is true correlation.

[kaggie]

It's very fascinating.

People might argue that bitcoin is too volatile to invest in, but it is down roughly 50% from its peak. This may seem like a lot, but not if you have compared it with several other stocks.

Tesla's highest price, 1 year ago: 1222. Lowest, one month ago: 628.
Meta/Facebook's, 1 year ago: 364. Now: 193.

Bitcoin is performing remarkably well, all things considered. I wouldn't expect bitcoin to be completely separate from a market rises and decreases, but I do expect it to further detach and outperform tech markets. Internet based companies won't do well in a recession as people move to harder goods. Bitcoin is different in that it is distributed in value across the world, so can weather a recession better than companies that are local to a few nationalities.

[Doan9269]

People might argue that bitcoin is too volatile to invest in, but it is down roughly 50% from its peak. This may seem like a lot, but not if you have compared it with several other stocks

i don't see much correlation between bitcoin and the traditional market since they are entirely different things and why is because it will be hard for a market in the traditional system of fiat to run dump to over 50% and still maintain it value, if such occur then things might have gone wrong so much beyond reasonable doubts, bitcoin volatility is one of the incomparable measures or factors that makes it correlation impossible with the reality of traditional markets, it resistivity during a dump in price now doubles up whenever there is a pump in price just in favour of the bitcoin market.

[kryptqnick]

I never believed the correlation was meaningful, so I'm not surprised that it's gone. I don't think it's a good sign, though, because I don't think it means anything in particular. So far, Bitcoin seems to be doing worse than, say, S&P 500 (and by 'so far' I mean over the last year). But it doesn't mean that Bitcoin won't survive if the stock market crashes, or that it won't recover fast if it doesn't. Just looking at the price movement from a year ago, June and July were quite low, but then August was the time of rising up, and by the middle of November the price reached its ATH point. It's totally possible for Bitcoin to climb up by the end of summer significantly and even set a new ATH by the end of the year.

[buwaytress]

Been kinda saying all week I hope to see it gone, but there's just too much aligning to say that its decoupling.

Price performance aside, trading intensity aside (volumes peaking and falling back at nearly the same pace), even investor behaviour seems similar, as I wrote in other threads... so we're talking about hodlers holding, talking about selloff from short term speculators, talking about regular buyers of the same stock happy to eat up sell orders. All behaving in more or less the same way.

The last big crashes and ATHs too, until those happen in completely different timeframes, I'm not convinced.

[Haunebu]

Not sure about that op. For example, the cryptocurrency market was affected by FIAT changes recently which led to the stock market crashing along with it which implies that it is still heavily dependent on traditional markets to some extent.

I don't think this will change at any point in the future even if popular cryptocurrencies like BTC are adopted at the mainstream level.

Why? Because most crypto investors tend to convert their crypto into FIAT asap and not the reverse since they find FIAT more reliable when compared to cryptocurrencies which makes complete sense.

[Flexystar]

Also, a month ago, there was an opinion in the media that the growth of bitcoin in 2021 could be triggered by the transfer of assets from the stock market to bitcoin, as shares are constantly losing value due to the current trend to curb inflation and price growth, and this can lead to growth bitcoin prices in the region of $70,000-$100,000. Although I personally do not believe that bitcoin will show  ATH in 2022, the loss of correlation may allow, for example, the price to rise to $50,000.

This is amazing statement which is keeping myself into bitcoin all the time. Bitcoin has become asset of secured and cold store value since few years now. People has started to understand it's real value after so many bearish and bullish cycles and finally we get to hear this from the media itself. There is also one more observation regarding bitcoin, it certainly drops along with the stock market but sooner or later though stock market continues to drop or stay stable, bitcoin will loose the connection and start it's upward trend. This is what differentiates bitcoin from the stock market. Obviously the reason is same as stated in above quote, stock looses the interest, bitcoin raises in value due to fundings.

[stompix]

Historical correlation? I don't see it.

I follow the S&P which is the benchmark for the US stock market for many years and I have been following Bitcoin for a few years now as well. In some cases they move together, like markets in general, but I don't see the long term correlation. In the graph you show, I see that it is only 3 months.

Remember the April covid scare? The start of the Russian invasion?
Bitcoin did exactly the opposite everyone thought it should do, it went down with the markets!

How much I communicate with various people, read analytical excerpts, look at various metrics daily, no one has yet denied the correlation of Bitcoin with traditional markets, except for you. You are probably the only one I have met on various platforms who is sure that there is no correlation and Bitcoin is a completely independent asset.

Replace the stock markets with the Teheran stock exchange, that will do the trick, once there is nothing American in the equation he will stop denying it, as long as there will be any trace of stars and stripes in the equation the will be no objectivity either.

That aside, let's see how much decoupling we're going to have, it started on the 27 if I'm not mistaken when the markets went down, but we had Memorial day, a full weekend, so we're going to need probably a full week of continuous trade for both of them....auch,$%$$  I just looked at the price, I'm really curious how it will look in 7 days if it goes below 30k a

[fiulpro]

I think this already long started even before we could notice since the beginning of the pandemic people were hoarding bitcoins and the price of the internal market was crashing. I do think that it does mean that for the long term we would be seeing a larger scale of growth on the basis of Bitcoins since this shows that it's unaffected by the traditional market which is inturn dominated by the rich and the powerful as well, thus their indirect control is lost.
Other than that I think it might have gone the opposite way around since the feds changed their rates people have been pouring in their investments from cryptocurrencies like bitcoins, therefore things like these might be affecting the overall price as well !
Less correlation is more independence!

[PrivacyG]

Could this have to do with the vision of regular traders about Bitcoin?  This is how I analyze this chart.  Many of the regular traders have seen Bitcoin more as a regular Stock than as a Commodity, for which reason they started trading Bitcoin in a similar manner they traded Stocks.  When bad news are in, sell Stocks and Bitcoin and buy Commodities.  When the economy is doing great, buy them and sell Commodities.  What do you think?

-
Regards,
PrivacyG

[Hydrogen]

if bitcoin's price movement can accurately be defined in relative 4 year boom and bust cycles correlating with miner rewards halving. Over the long term we may see that the latest BTC bust cycle is merely correlating with the recent bust cycle of the DOW.

On a day trading perspective the claimed correlation between equities and crypto becomes apparent. It is possible that both trading in lockstep cannot be maintained. It takes a sufficient quantity of liquidity to maintain the correlation and liquidity could decline over time as it is eroded by inflation on the stock market side of things.

Another aspect to consider is earnings reports. The outlook of which is not looking great for US retailers. There could be significantly greater downforce on stocks and equities in contrast to crypto. Which will make the claimed correlation between the two asset classes difficult or impossible to maintain over the long term.

[jossiel]

I've been noticing the correlation of bitcoin to the traditional market and looking at it as it weakens, that's much better. Because bitcoin is better to be a stand alone market bringing the whole market of cryptocurrencies as its standard bearer.

This is also gives the idea that adoption is growing and more people are jumping from the usual markets to the crypto market as they get to learn and understand how it works.

[pooya87]

How much I communicate with various people, read analytical excerpts, look at various metrics daily, no one has yet denied the correlation of Bitcoin with traditional markets, except for you. You are probably the only one I have met on various platforms who is sure that there is no correlation and Bitcoin is a completely independent asset. Well, for a convinced bitcoin maximalist (if you are one), such denials are not surprising, just like the denials by some that bitcoin is a risky asset and not a safe haven.

Lots of others are saying the same thing as I do, you are just not looking.
It's like during those times when price drops a little and the internet is filled with idiots saying "bitcoin is dead" then I call them on their bullshit on bitcointalk. If you only look at the mass FUD and my comment alone you'd think I'm the only one saying the opposite!!!

Here are a handful of examples I found with a quick search on the internet:

...  A negative correlation means that assets tend to move in the opposite direction.
For its part, bitcoin has been viewed as an asset that isn’t correlated with many others. The crypto asset certainly has a low correlation with stocks, as represented by the S&P 500 index SPX, -0.75% and a pretty low correlation with technology stocks, as represented by the large-capitalization oriented Nasdaq-100 index NDX, -0.74%.

Bitcoin is absolutely not correlated to the stock market. Studies say its correlation is about 0.36. Things are correlated when this R2 is above 0.8

If you think that the correlation is because bitcoin is going down these days, the same as the stock market is, is just because both asset classes are highly liquid. So, when people need cash, those tend to be the first things they sell

BTC price action is behaving as if correlated to the stock market. This speaks to the investment thesis of the current buyers/sellers, and the role BTC is playing as an allocation in their portfolio. I’ve been hodling my BTC since 2017 but I have been rotating out of growth stocks and reducing my stake in equity overall since Q4. In terms of my behavior, it is not correlated, but my view is not the consensus view of the current market participants. We are early and hopefully through the coming shitstorm the consensus view will shift away as ownership shifts away from traders and speculators.

Why would you think Bitcoin is correlated to the stock market? Is that something you read somewhere and thought it sounded smart? Sounds impressive, but you are just spreading crap with nothing to back it up. Nothing. Do you even know the difference between the stock market and Bitcoin?

Some of them are saying pretty much the same thing as I said (no correlations before whatsoever, then a weak correlation in past 2 years starting from pandemic crash coincidence)

for the last year or two, they have been somewhat linked.
Before that, the correlation was even worse, almost like that of two independent subjects.
It seems that it's been since the Corona virus crash, that we've had that increase in correlation. And getting more of a link.

Finally here is an article on Forbes with some quotes from different people in it representing another view:
https://www.forbes.com/sites/benjaminpirus/2020/03/20/contrary-to-popular-belief-bitcoin-isnt-consistently-correlated-to-anything/

Of course there are lots more and these were some of the examples. There are many opinions out there, some just like mine, some opposite and some in between...

[Wind_FURY]

OP, that chart is just from first of March to end of May. That's merely 3 months, and not enough data to say that the correlation has truly weakened. When in doubt, always zoom out. Can you post the link of the site, and can we zoom out?

This is the zoomed out chart from CoinMetrics, https://charts.coinmetrics.io/correlations/



The correlation is currently in ATH. I believe it's because Bitcoin has become very mainstream and has surged in adoption among legacy market investors/traders.