For most of the year, Bitcoin has seen a strong correlation to traditional indices. Given the increasing uncertainty and speculation, over the course of the year, the S&P 500, Gold, and Bitcoin were at the forefront. However, despite a rather long stint of correlation, Bitcoin appeared to be decoupling.
This was noted by the crypto-analytic platform, Santiment which noted that with Bitcoin’s massive price surge this past week, its correlation to the S&P 500 has dropped back to 0 for the first time since May on its 30-day rolling average model. Interestingly, the market data provided by the platform indicated a bullish sign for crypto after having an all-time high correlation in August.
The reason for this is due to the fact that Bitcoin has historically “thrived” when its reliance on world markets, and other asset classes or industries, is minimal, and trading can operate independently without interference from non-crypto events as distractions.
As for Bitcoin, the world’s largest cryptocurrency’s price has continued to strengthen. Positive developments such as Paypal crypto integration as well as the rising institutional demand for BTC and Square, MicroStrategy, and Stone Ridge’s investment triggered a much-anticipated surge in Bitcoin’s price above $12k, but a clean breakout above $13K was abrupt and the reason behind it still seems to prompt much debate.
The ongoing strong technical momentum of the coin along with its latest decoupling from stocks could also possibly project that the bullish case for Bitcoin st play continued to strengthen. This, in turn, will further catapult the price of the rest of the altcoin market by extension.
Bitcoin and Gold Correlation Holds
Bitcoin’s growing independence in relation to stocks was very visible, it was not the case with Gold, and its correlation with the metal, which happens to be one of the crucial assets in the traditional space, continued to be strong. According to the latest Skew charts, noted despite a minor negative correlation earlier in the month, BTC-XAU’s 1-month correlation has sprung back up in action to 23.5%. This signaled that as Bitcoin matures, it will potentially trade more like gold, which is a store of value, rather than risky assets such as stocks.