Correlation bitcoin with stocks and bonds drops

Last Updated: 11 August 2022

The correlation of bitcoin with the bond index and the Nasdaq 100 index continues to fall. According to data from research firm Kaiko, it is now even reaching a three-month low.

Price correlation

For a long time, the correlation between bitcoin and many other asset classes was very high: Did stocks fall? Then bitcoin fell too. The decoupling of bitcoin’s price from that within the ‘big tech world’ seems to have taken some shape again.

Both stock and bond yields fell significantly since the beginning of 2022. Bitcoin, however, fell even harder. Now a divergence seems to be emerging.

Clara Medailie, a researcher at Kaiko, also sees this:

“Over the past year, crypto and equity markets have traded closely together, with record high correlations in May. In the past few months, however, this correlation has weakened slightly after there was a sell-off in the crypto market that was larger than that of the S&P 500 or Nasdaq stock indices.”

So it’s not necessarily positive: as bitcoin performed worse than stocks, the correlation decreased. For example, there can also be a negative correlation where bitcoin rises while shares continue to fall.

Unrest in the market

On a macro-economic level, times are unsettled: there is high inflation, and monetary policy is changing with a tighter fiat policy. And at the same time, there is geopolitical unrest around Ukraine and Taiwan. This has repercussions on shares, bonds, and also bitcoin.

Add to this the malaise surrounding Luna, Celsius, 3AC, and the consequences within the crypto market, and you can safely say that these have been turbulent months.

Later today (Wednesday, ed.), the US Bureau of Labor Statistics will again announce the new consumer price index for July. This could cause a new trend in all markets.

  • Gabriele Spapperi

    I first came into contact with Bitcoin in 2017 - and since then, the topic of cryptocurrencies has never left me. For this reason, I have also made BTC & Co. part of my profession and write as a freelance author for crypto publications.

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