Bitcoin and S&P 500 No Longer Correlated: Mati Greenspan

The Quantum Economics founder says there was only ever a ‘loose correlation’ between crypto markets and the S&P 500 during the pandemic.

Crypto analyst Mati Greenspan says the correlation between crypto assets and the S&P 500 has fallen significantly since the dramatic sell-offs in tandem early in the pandemic.

In the Aug. 5 Quantum Economics newsletter, Greenspan stated that Bitcoin (BTC) and crypto are “once again able to claim independence from the traditional markets.� However the analyst also added that even during the early stages of COVID-19 — roughly March to May — the markets were never more than “loosely correlated.�

The following chart represents Bitcoin’s correlation with the S&P 500 on a range of 1 (perfect correlation) to -1 (inverse correlation).

90-day Pearson correlation between Bitcoin and S&P 500. Source: Mati Greenspan

“We can clearly see earlier this year, where the correlation spiked up to 0.6 due to the multi-asset early-pandemic sell-off,â€� Greenspan said. “By now, however, we’re once again below 0.2, which basically means that there is no correlation on a day-to-day basis anymore.â€� 

Common market drivers

Despite these market trends seemingly diverging, Greenspan said there was at least one common factor driving both stock and digital assets: the Federal Reserve.

“During periods when the Fed prints money, it sends prices upward in all markets,� he said.

Looking bullish

Greenspan stated in an Aug. 2 interview that he believed “the bull market is back.â€�  On July 22, Gemini crypto exchange co-founder Tyler Winklevoss stated in a tweet that the Fed was continuing “to set the stage for Bitcoin’s next bull run” with further stimulus spending.

As of this writing, the price of Bitcoin is approaching $11,800, having risen 4.89% in the last 24 hours. 

This surge comes amid expectations that the U.S. government will announce a second stimulus package on Aug. 7. Democratic leaders are pushing for a $3.4 trillion package, while Republicans are advocating for one worth $1 trillion.