Correlation between S&P 500 and Bitcoin

20 февр. 2022 г.

The stock market and the cryptocurrency market do not seem to be interdependent markets
In this post, we want to examine this issue: Is there a correlation between the cryptocurrency market and the stock market?
We all know the dominance of Bitcoin in the cryptocurrency market. Bitcoin has traditionally been recognized as the leader in the cryptocurrency market. Thus, the study of the correlation between bitcoin and the stock market can be generalized to the entire cryptocurrency market.
Therefore the correlation between Bitcoin and S&P 500 has been examined. In this regard, In addition to graph analysis, we examine linear correlation oscillators as well as nonlinear correlations (Kendall and Spearman)
In a linear correlation, the Pearson correlation (r) is 0.4 which shows "low positive correlation" in the whole chart
Kendall and Spearman nonlinear regression analyzes show a positive correlation in many parts of the chart.
Comparing the oscillators with the chart, it seems that since 2017, the correlation between the price of Bitcoin and the S&P 500 index has increased. Prior to 2017, the correlation between Bitcoin and the stock market index was low.
Correlation between peaks and valleys:
Looking at the Peaks and Troughs of the two charts shows synchronicity as well as high correlation in these points. Peaks and Troughs seem to be highly correlated with bitcoin charts and stock indexes.
Based on the correlation, the behavior of recent weeks can be explained:
In February, March, and April 2021 we saw a peak for Bitcoin and then a drop in its value in May. At this time the S&P 500 was still growing and had not yet experienced its peak. So in July, bitcoin grew again. And reached its historical peak at the same time as the peak of S&P 500. After that, Bitcoin and S&P 500 both started to fall, which continues to this day. This fall in Bitcoin is confirmed by its correlation with S&P 500SPXBTCUSDBTCUSDBYBIT:BTCUSD