While Bitcoin demonstrated a clear correlation (though weak) with the stock markets in previous years, this dropped off towards the end of 2020 and the correlation fell below 0.2 at the start of 2021. Since the start of this year, both Bitcoin and the S&P 500 have been on a strong uptrend as the U.S. economy climbs out of the pandemic, and both hit an all-time in the last six weeks. However, while BTC has doubled in value since the start of the year, the S&P 500 index has only improved by 8.5% over the same period.
The two markets have moved out of sync during this time, with Bitcoin experiencing multiple sudden burns upwards, while the S&P 500 barely moved. Meanwhile, Bitcoin has also been hit with sudden downward shocks, most notably after Elon Musk's tweet this week that Tesla would stop accepting Bitcoin. As a result, the realized correlation between the two markets has been on the downtick since December 2020, and fell below zero, back to negative, in March 2021. This is the first time it has been below 0 since January 2020.
This could indicate that Bitcoin is gradually decoupling from the stock market, and may instead be forming an inverse correlation with it (when stocks move in one direction, Bitcoin goes the other way). For this to be validated, Bitcoin would need to continue moving away from the S&P 500 in the coming months.
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