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Bitcoin’s Correlation with U.S. Stocks: A Closer Look

Explore the intricate relationship between Bitcoin and U.S. stocks in this in-depth analysis, shedding light on their correlation and potential impact on the financial market.

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Bitcoin and U.S. Stocks in Lockstep

Bitcoin (BTC) has faced challenges recently, experiencing a more than 20% drop since reaching a record high in mid-March. Meanwhile, U.S. stocks, represented by the Nasdaq Composite and the S&P 500, have been consistently climbing to all-time highs.

Both the Nasdaq Composite and the S&P 500 closed higher for the seventh consecutive day, setting new records. The S&P 500 achieved its 37th record close of 2024, while the Nasdaq marked its 27th record close, according to MarketWatch.

A recent report from The Block highlighted that bitcoin’s correlations with these stock market indices had dropped to multi-month lows, reaching -0.84 with the Nasdaq and -0.82 with the S&P 500. Today, however, they are moving in sync, albeit in a downward direction as stocks have turned sharply lower.

By midday in New York, the Nasdaq is down by 1.8% and the S&P 500 by 0.9%. Bitcoin, which initially rose above $59,000 following positive U.S. inflation news, has now declined by 0.6% to $57,500. The broader CoinDesk 20 Index is also showing a 0.4% decrease.

Market strategist Joel Kruger from the LMAX Group warned of potential further downside for cryptocurrencies if the stock market correction deepens. He suggested that the risk of U.S. equities, which are currently overbought, undergoing a significant pullback could impact the crypto market temporarily.

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