One of the most important issues to know what the future will be in the price of Bitcoin, is its correlation with traditional financial markets. Well, if this correlation exists, as different analysts have affirmed over the years, we could predict the direction of BTC by observing the trends in the stock market. However, not everyone agrees with this theory. This being the case with Mati Greenspan, who claims that Bitcoin is no longer correlated with the S&P 500.
The Bitcoin price problem
The issue of the correlation between Bitcoin and the S&P 500 has been haunting the crypto world for several years now. And it is that, for many users of cryptocurrencies, it is not a minor matter. Well, one of the foundations on which the success of BTC has been sold has been its quality as an asset store of value. A capacity that would automatically lose if there was a correlation between the index and the cryptocurrency.
Since, the great attraction of an asset reserve of value is that there is no relationship between its price and the traditional financial market. In this way, in the face of an economic or political crisis that makes the markets collapse, the asset reserve of value will maintain or even increase its price. Following the behavior that precious metals such as gold have shown over the centuries.
Therefore, if this correlation between Bitcoin and the S&P 500 index is clearly demonstrated, a large part of the crypto community would have to rethink what the role of cryptocurrency is within the international economy.
A debate for which figures in the crypto world have clamored, such as Vitalik Buterin, who has asked that we focus more on the capabilities of BTC as a means of payment, and less on its supposed quality as a refuge of value.
Greenspan sees no correlation with S&P 500
However, if anything, the correlation between Bitcoin and the S&P 500 continues to be a topic of debate among analysts in the crypto world. Thus, Mati Greenspan recently stated that the levels of correlation between the cryptocurrency and the index have fallen significantly, since the collapse in the markets at the beginning of the Coronavirus pandemic.
Thus, in the Quantum Economics Newsletter of August 5, Greenspan wrote that cryptocurrencies are “able once again to claim independence from traditional markets” Showing to support its position a graph that reflects the correlation between BTC and the S&P 500. In which it is observed that it reached its highest point at the beginning of the year, to fall sharply since then.
“We can clearly see that earlier this year, the correlation rose to 0.6 due to the sale of multiple assets in the early days of the pandemic (…) However, we are now below 0.2 again, which it basically means there is no correlation on day-to-day basis” Mati Greenspan commented.
Although not everyone agrees with the position that Bitcoin is no longer correlated with the traditional financial market. If Greenspan’s analysis is correct, this would mean that those who claim that BTC is indeed an asset store of value would have new arguments to defend their position. What makes this our Today’s Data here on CryptoTrend.