Bitcoin price has shown some signs of being correlated to the stock market over the past few months

By Selena On Jun 18, 2020

Bitcoin price has witnessed some faint price action these days. However, not only Bitcoin but the stock market also traded sideways in the past few weeks. At press time, the price of Bitcoin is fluctuating around $ 9,448, slightly down.

BTC/USD 4 hours chart | Source: Tradingview

Bitcoin price is struggling to hit a high in the near term

Bitcoin’s price has been stuck in the relentless trading range of $ 9,000 to $ 10,000 for the past few months. The selling pressure in the five-digit price area has proved impossible and halting a major uptrend – which allows Bitcoin to rise more than 150% from its yearly low.

Some analysts believe that its current lack of motivation can also be attributed to a growing correlation with the stock market.

Quantitative analyst Sam Trabucco also agrees with this view. He said:

With the Fed’s news, the BTC/SPX correlation has not only gotten stronger, it’s gotten *faster* too. Which makes sense — you’d expect that if the entire crypto market (or close, by volume) is trading vs. SPX, the BTC impact would be immediate, and that’s what we’re seeing now.

— Sam Trabucco (@AlamedaTrabucco) June 15, 2020

There is no question that Bitcoin has correlated more with stocks in the past few months than a few years ago, but the data shows this correlation is still very small.

Crypto analyst Luke Martin also shared this trend in a recent tweet topic. He explained that BTC’s macro correlation with the S&P 500 is still nominal.

Another way to visualize the how Bitcoin’s correlation has oscillated from little-to-no correlation with stocks is to look at how it has evolved over time.

This chart shows 2014-present.

Not a negative corr. Not a positive corr.

Movement from little-to-no corr the entire time. pic.twitter.com/8IHfJQH21a

— Luke Martin (@VentureCoinist) June 17, 2020

The reason why this trend has changed a bit during the recent stock market sell-off is that most of the assets fell during a panic.

He added:

“The peak was around March 12 as all ‘risky’ assets sold off together. (likely reason: In a crisis, everything sells off together as the driving force behind that decision is dominated by fear).”

This seemed to be a valid reason, as gold did not even avoid the mid-March decline, although its performance during that period was solid.

Bitcoin’s dominance is “dangling on the edge of the precipice”

According to cryptocurrency trader Scott Melker, Bitcoin’s dominance is hovering on the brink. In particular, if this index collapses, the Altcoin season is likely approaching.

$BTC Dominance

For those of you that believe in charting this thing, it’s dangling on the edge of the precipice. If it breaks down, you know what that could mean?

Something that rhymes with fault reason. pic.twitter.com/eOwwkBTNKS

— The Wolf Of All Streets (@scottmelker) June 17, 2020

With data from CoinStats, the Bitcoin Dominance index currently stands at 64.5%. It was down nearly 2.5% from mid-May. Bitcoin dominance is now down by almost 10% from last year’s high of 73.1% achieved on September 2, 2019.

Because of Ethereum’s strong performance in early 2020, it dropped below 70% on January 6 and never sought to regain this level.

In January 2018, Bitcoin saw its dominance drop to an all-time low of 33% as investors were throwing money at altcoins during the peak of the giant speculative cryptocurrency bubble.

You can also check Bitcoin Price here.

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