Analyst James Van Straten points to the weakening correlation between BTC and the US stock market

What’s new? Bitcoin set a new price high of $92 500 last week for a 112% YTD gain, while the total crypto market capitalization hit a record at $3,23 trillion on November 18. Because bitcoin is considered a risky asset, it tends to have a high correlation with US stocks, but the current 30-day correlation between the two is just 0,46, one of the lowest in five years.

Cointelegraph’s material

What else is known? During this time, there have been periods of absolute direct correlation between the first cryptocurrency and the Nasdaq Composite index. This was largely the case in 2021 and 2022 when both assets rose and fell at the same time. The trend continued into the first half of 2024, when BTC hit an all-time high in March, rising above $73 000.

Since then, the Nasdaq continued to reach new highs, while bitcoin went into consolidation, trading for a long time in the range of $50 000 to $70 000. However, after Donald Trump won the US presidential election on November 5, bitcoin went sharply upward while the Nasdaq index began to stagnate.

The Nasdaq is down 4% from its all-time high, while bitcoin is about 1,5% away from a new price record.

According to Investing.com, out of 222 trading days in 2024, bitcoin futures on the CME and the Nasdaq index fell/grew simultaneously only 52% of the time.

As Cointelegraph analyst James Van Straten notes, bitcoin is becoming a larger asset class — it is now the seventh-largest by market capitalization. The market is starting to understand BTC better, and so we should expect it to start trading without being tied to other asset types, on its own, the analyst added.

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Bitcoin’s correlation with the largest altcoin, Ethereum, is also weakening. It has been at 1 since 2019, with a slight decline seen in 2021: then ETH overtook BTC in terms of growth during the bull market.

However, at the moment, the average 30-day correlation is only 0,35, the second-lowest level ever observed. Van Straten believes that as with BTC and equities, BTC and ETH will begin to deviate from each other over time.

Last week, bitcoin’s correlation with gold fell to its lowest level since last December. Analysts noted that bitcoin is gaining popularity as an alternative to the precious metal as an inflation hedge.