Will Bitcoin’s Correlation with stocks separate after hitting 2 month low?


Bitcoin’s most recent gain caused it to diverge even farther from the stock market. While global markets continued to fall on news that the US might impose a ban on Russian energy, the world’s largest cryptocurrency rose more than 6% to surpass $41,000.
Will Bitcoin's Correlation with stocks separate after hitting 2 month low?

Bitcoin surpassed stocks last month

Despite falling in line with equities in the early phases of the Russia-Ukraine war, the token has regained its footing in recent weeks. In the last 30 days, it has dropped around 6%, vs a 9% decrease in the S&P 500 index.

Bitcoin’s correlation to equities and traditional assets had dropped to a two-month low in the last 30 days, according to data from crypto researcher Kaiko.

Will Bitcoin's Correlation with stocks separate after hitting 2 month low?
Bitcoin seen separating from traditional assets

Increased regulatory interest in the aftermath of Russia’s invasion of Ukraine, which became the first country to formally seek crypto assistance, is a crucial element in this potential decoupling. Fears that Russia would use cryptocurrency to evade US sanctions prompted some developed countries to create comprehensive crypto legislation.

Later in the day, US President Joe Biden will sign an executive order that is intended to boost cryptocurrency use, and the European Union will vote on a key crypto law next week.

This might help crypto markets separate themselves from equities and other risky assets, boosting adoption.

Since 2021, when a considerable amount of institutional interest joined the market, Bitcoin’s correlation with stocks has been increasing. While the token’s popularity propelled it to new heights, it also caused it to trade more like traditional risk assets.

Traders now see Bitcoin as being similar to U.S. technology companies, which also benefit from increasing market liquidity.

Will Bitcoin's Correlation with stocks separate after hitting 2 month low?

Is there still no gold in the digital realm?

In direct contrast to the unpredictable fluctuations observed in Bitcoin, gold prices have risen about 8% in the last 30 days. The token’s value as a safe haven has been harmed as a result. Decoupling the token from gold isn’t always a good thing.

The price of Bitcoin has been unable to keep up with the rapid spike in U.S. inflation this year, putting its viability as an inflation hedge into doubt.