The stock market is still within striking distance from former all-time highs set in 2021, yet Bitcoin and other cryptocurrencies feel miles away by comparison.

The two vastly different types of assets that once traded lock and step are now experiencing a significant divergence. Is it time for BTCUSD to kiss its correlation with the stock market goodbye?

Is Crypto’s Correlation With The S&P 500 About To End?

All throughout 2020 the correlation between the stock market and cryptocurrencies was notable. Stock market bubble “froth” as it was referred to at the time was spilling into Bitcoin and altcoins.

The relationship stayed relatively similar all throughout the bear market. The stock market put in a bottom ahead of crypto due to the FTX collapse in November. Since then, stocks have made a stellar comeback, but overall the once volatile cryptocurrency market has been muted.

Is the stock market correlation about to end? | BTCUSD on TradingView.com

The two asset classes previously exhibited a strong correlation according to the Correlation Coefficient between the S&P 500 and BTCUSD, but it is at risk of breaking down in the coming months if price action doesn’t come more into parity.

The Correlation Coefficient measures not just the strength but the direction of the relationship between any two assets, and the direction is currently pointed down. This suggests that the correlation will continue to weaken unless the relationship reverses course.

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Author: Tony "The Bull"

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