The cryptocurrency analyst According to Mati Greenspan, the correlation between crypto assets and the SP 500 has declined significantly since the dramatic tandem sale at the start of the pandemic.
In the Quantum Economics newsletter of August 5th Greenspan stated that Bitcoin (BTC) and cryptocurrencies “can once again claim their independence from traditional markets”.. However, the analyst added that even in the early stages of COVID-19, such as March through May, markets were never more than “slightly correlated”.
The following graphic shows the correlation of Bitcoin with the SP 500 in a range from 1 (perfect correlation) to -1 (inverse correlation).
90-day Pearson correlation between Bitcoin and SP 500.Source: Mati Greenspan
“We can clearly see earlier this year where the correlation rose to 0.6 due to the sell-off at the start of the multi-asset pandemic.”Said Greenspan. “Right now, however, we’re back below 0.2, which basically means there is no daily correlation.”
Common market drivers
Despite these apparently different market trends, Greenspan stated that stocks and digital assets have at least one common factor: the Federal Reserve.
“At a time when the Fed is printing money, it sends higher prices in all markets.”said.
Greenspan stated in an interview on Aug. 2 that he believed “the bull market is back”. On July 22nd, the co-founder of Crypto Exchange Gemini, Tyler Winklevoss said in a tweet that the Fed continues to “create the conditions for the next Bitcoin uptrend” with increased economic spending.
At press time, Bitcoin is approaching $ 11,800 after rising 4.89% in the past 24 hours.
This increase is due to the expectation that the US government will announce a second stimulus package on August 7th.. Democratic leaders push for a $ 3.4 trillion package, while Republicans advocate a $ 1 trillion package.