Bitcoin’s rising correlation with stocks is about eroding trust in the US dollar.

Summary

Bitcoin's price is increasingly correlated with the S&P 500, reflecting a shift in investor behavior rather than a maturation of crypto as a risk asset. This correlation indicates a loss of confidence in the US dollar, as both Bitcoin and equities respond to fiscal instability and inflation concerns. The US Dollar Index recently hit a 12-month low, coinciding with Bitcoin's 9% gain and a 6% rise in the S&P. Central banks are diversifying away from the dollar, evidenced by increased gold purchases and legislative changes favoring Bitcoin. The joint price movements signal investors' efforts to protect purchasing power amid fiscal and monetary uncertainty, rather than a convergence of asset classes. The current market dynamics suggest that both Bitcoin and stocks are viewed as scarce assets in an environment of expanding monetary supply.

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