Bitcoin's S&P 500 Correlation Hits Decade-Low, but Daily Data Tells a Different Story
A recent report from crypto asset manager Bitwise shows that the correlation between Bitcoin and the S&P 500 has hit a decade-low. However, when looking at daily data, the story is more complex.
The log-level correlation between Bitcoin's price path and the S&P 500's has been around -0.62, according to CryptoSlate's calculation using FRED data. This means that over a period of 260 days, the two assets have tended to move in opposite directions.
However, when looking at returns, the correlation is actually positive, at around +0.40. This suggests that while Bitcoin and the S&P 500 may be moving apart in terms of price path, they are still experiencing similar gains or losses on many days.
In fact, a hypothetical portfolio analysis shows that adding Bitcoin to an equity allocation can increase volatility and drawdowns over certain periods, but reduce them over others. The results also show that Bitcoin tends to fall consistently alongside the S&P 500 during larger declines.