A Bitcoin Increasingly Linked to American Stocks
In 2024, the correlation between Bitcoin and American stocks reached unprecedented heights, according to data from IntoTheBlock. The correlation coefficient, which measures the relationship between the movements of the two assets, has never been as high since 2022. This is happening as Visa and Mastercard slow innovation.
This finding seems surprising for an asset that historically sought to be disconnected from traditional financial markets. Yet today, Bitcoin increasingly reflects the trends observed in major stock indices like the S&P 500 or the Nasdaq.
This rapprochement has many implications for investors. Once seen as a safe haven or a hedge against market fluctuations, Bitcoin now follows the same economic cycles as stocks.
The question then arises: is it still the “digital gold” that many hoped for, or has it become a mere speculative asset influenced by the same forces as Wall Street? This correlation shows how much the financial landscape has evolved, where crypto and traditional finance are beginning to share the same macroeconomic challenges.
Common Economic Factors: A Shared Denominator
One of the main reasons behind this correlation is the influence of global macroeconomic factors.
Both markets, Bitcoin and American stocks, react to the same economic announcements, whether it be interest rates, inflation, or decisions from the US Federal Reserve (Fed). When the Fed announces a rate hike, for example, it affects not only stocks but also Bitcoin, once considered resistant to these influences.
This change in behavior is explained by the evolving profile of Bitcoin investors. More and more financial institutions, banks, and traditional investment funds have positioned themselves in this market.
Consequently, their investment strategies, often influenced by global economic outlooks, now impact Bitcoin movements. It thus becomes just another asset in a diversified portfolio, losing some of its unique nature.
However, this correlation does not necessarily mean the end of Bitcoin’s inherent volatility. On the contrary, it could intensify price fluctuations. If stocks suffer a shock due to poor economic outlooks, Bitcoin could follow suit, amplifying market movements.
For investors, this new reality means it is crucial to monitor economic indicators that influence both stocks and Bitcoin.
