The cryptocurrency market has been in turmoil over the past weeks, since it all began at March’s end. It is interesting that this coincides a similar decline for the largest US stock market indexes. This resulted in a multi-month high correlation between crypto and Wall Street.
After a difficult start to the year, bitcoins and other altcoins began to gain momentum in March. BTC alone soared to almost $50,000 six weeks after falling below $35,000 just six weeks before.
Similar conditions prevailed for the US stock market. All of its benchmark indexes – namely, the S&P 500, the Dow Jones, and Nasdaq Composite – went down prior to March but peaked at the end of it.
The US Federal Reserve increased interest rates in April after years of less flexible policies. The cryptocurrency community is acutely aware of the changes that took place in the digital asset sector over the past month and a-half. BTC actually lost half of its value at one point, and now trades at about $30,000
Although the declines were less severe for the more volatile and regulated US stock market indexes, they are still in the red. The Dow is down by 12%, the S&P by 15%, while Nasdaq, propelled by the correction in the tech sector, has seen a 22% decrease.
Yesterday saw losses of up to 5 percent, making it the worst trading day in history since the COVID-19 pandemic. The futures contracts declined as well, bringing fears of a bear market, while today’s market opening brought some more pain.
Crypto-US Stock Correlation Spikes
Given the aforementioned data, the blockchain analytics resource IntoTheBlock concluded that the correlation between the two largest cryptocurrencies – BTCAnd ETH – and the three most prominent US stock market indexes has increased to multi-month highs.
In fact, the company revealed that the 30-day correlation is above 0.9 (the highest is 1) and noted that “crypto is moving almost in tandem with traditional equities.”
Our correlation matrix displays how crypto is moving almost in tandem with traditional equities such as Nasdaq, S&P500 and Dow Jones
A 30-day correlation of 0.9 is more than acceptable
Chart: https://t.co/Wx8RxQwatF pic.twitter.com/hsUbUMU9HH
— IntoTheBlock (@intotheblock) May 19, 2022
However, gold, traditionally considered as a safe-haven asset, has fallen sharply since its peak in March.