Is Bitcoin and The Equity Markets Correlated...What Do You Think???

The Great Recession is a term that represents the sharp decline in economic activity during the late 2000s, which is considered the most significant downturn since the Great Depression. The term “Great Recession” applies to both the U.S. recession, officially lasting from December 2007 to June 2009, and the ensuing global recession in 2009. The economic slump began when the U.S. housing market went from boom to bust, and large amounts of mortgage-backed securities (MSBs) and derivatives lost significant value.

That’s when Bitcoin was born…after the demise of the financial markets in 2009. Satoshi once said:

“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.”

As much as Bitcoin has been correlated to the US equity markets, they have been uncorrelated to the US equity markets. So to try and predict the price of Bitcoin with another asset class, specifically the equity market is difficult or is it?

It was two weeks ago during one of our Leo Podcast episodes that @scaredycatguide showed when the equity markets sold off in March, so did Bitcoin and when the equity markets bottomed in March, so did Bitcoin and when the equity markets started rising in March and April, so did Bitcoin.

Correlation Between Bitcoin and the S&P500 | Why 2020 Is a Fascinating Case Study for BTC

A question @nealmcspadden had earlier this week, is Bitcoin's performance on a Sunday correlated to the S&P 500's performance on Monday? So I quickly put together the data looking at the last 52 Sundays and displayed it in a graph. From the graph, it doesn't appear there is any correlation.

@nealmcspadden manipulated the data a bit more taking out time and just graphing the ROI for that day.

The data is all over the place, confirming there is no correlation between Bitcoin's performance on a Sunday correlated to the S&P 500's performance on Monday. Now note, this is only one day in the week. Clearly there is some type of correlation as @scaredycatguide in March and April.

Thomas Lee is a Managing Partner and the Head of Research at Fundstrat Global Advisors. He is an accomplished Wall Street strategist with over 25 years of experience in equity research, and has been top ranked by Institutional Investor every year since 1998. I just remember Thomas saying one day in 2019, that Bitcoin won't rally, unless the equity markets rally. What Thomas was saying indirectly was Bitcoin and the equity markets are correlated. I guess that makes sense because back late 2018 in an interview on CNBC, Thomas broke said investors don't buy into Bitcoin to hedge macro risks, but buy Bitcoin and other cryptyocurrenices when they feel optimistic about the wider economy, geopolitics and industry and traditional markets are booming?

So what do you think, is Bitcoin and the S&P 500 correlated in any way?

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

Posted Using LeoFinance