Bitcoin has always been dubbed as “digital gold” or “safe haven” given its fungible, durable and scarce nature. But it is yet to prove its “safe-haven” nature like gold as a metal. With its rapidly growing popularity, Bitcoin is now being correlated with the S&P 500, which is Wall Street’s equity index and a powerful benchmark for the global stock markets.
During 2018, the Bitcoin-S&P 500 correlation showed a record high of around 65%, thereby enhancing people’s expectations, but the correlation is highly unpredictable. Then again, at a point of time, the correlation showed a skew of only 37%, which implies a weak correlation between variables. Therefore, the one-year-old correlation cannot be a robust benchmark to predict the movements of the crypto stock market.
Since May 2020, Bitcoin’s price has been on its lowest average as S&P 500 correlation price sinks. Bitcoin price saw a decline from $12000 since Tuesday morning and steeped negatively on the rest of the days of the week. Other major altcoins like Ethereum also saw the declining phase with the only exception of TRON that has a record high of 17.32% over the week, with the launch of its DeFi meme coin called SUN.
The flash crash in the US stock market affected Bitcoin price negatively. Again, the correlation between Bitcoin and S&P 500 that soared to more than 60% last week fell flat this week, thereby proving its unpredictability once again.