Crypto Derivatives Analysis Firm: Bitcoin No Longer Correlates With U.S. Stocks

Author: Omkar Godbole, CoinDesk; Compiler: Songxue, Jinse Finance

Bitcoin (BTC) wealth is no longer tied to US stock market sentiment.

The rolling 90-day correlation of bitcoin spot price changes to changes in the Wall Street tech index, the Nasdaq and, more broadly, the S&P 500 has dropped to close to zero. It is now at its lowest level in two years, according to data tracked by cryptocurrency derivatives analytics firm Block Scholes.

“The correlation is now at its lowest level since July 2021, when BTC was between the twin peaks of April and November,” Andrew Melville, research analyst at BlockScholes, said in an email.

"The correlation has fallen as both assets have recouped losses sustained during last year's tightening cycle," Melville added.

The weakening correlation with traditional risk assets means that cryptocurrency traders who only focus on traditional market sentiment and macroeconomic developments may face disappointment.

ETF Narrative

Recent spot bitcoin exchange-traded fund (ETF) filings from BlackRock (BLK), Fidelity, WisdomTree (WT), VanEck, Invesco (IVZ) and others have brought optimism to the cryptocurrency market.

Since BlackRock’s filing on June 15, ignoring the range-bound moves in U.S. stock indexes, Bitcoin has returned 25%.

Ilan Solot, co-head of digital assets at Marex Solutions, said the ETF narrative can be broken down into three parts: the early launch, the post-launch process for spot ETFs, and the validation of cryptocurrencies as an asset class.

Solot tweeted: "The flow of investment products in the next few months may be a litmus test for the latter, so I will be watching closely."

To the dismay of bears, investor interest in exchange-traded products has increased since June 15.

K33 senior research analyst Vetle Lunde said of the ETF impact in a note to clients on Tuesday: “Globally, Bitcoin ETF inflows in June were 13,822 BTC, and these funds were held in Belay. The inflows started following the announcement on June 15.” “Flows were strong across jurisdictions, with spot ETFs in Canada and Europe, as well as futures ETFs in the U.S. experiencing strong inflows.”

Analysts noted that while the ETF narrative is currently dominating, some macroeconomic factors, such as potential pressure on statutory liquidity, still warrant attention.