Comparing Bitcoin’s Downturn with the S&P 500 Movement

Bitcoin (BTC) Price Highlights

• Bitcoin and the S&P 500 have been positively correlated since at least 2018.
• The correlation is more pronounced in downward moves.
• The BTC price has been more volatile.

Trader and analyst Luke Martin (@VentureCoinist) showed two similar-looking charts comparing the Bitcoin price with the S&P 500.  The charts are practically mirror images of each other, especially during the time frame when the Federal Reserve announced a new stimulus package.

$BTC & stocks still moving in lockstep.

Looks like they both like the conference about further stimulus… pic.twitter.com/aqnLGKe72s

— Luke Martin (@VentureCoinist) March 17, 2020

Below, we are going to take a look at both the Bitcoin and the S&P500 price in different time-frames in order to determine if there actually is any correlation and use that for future forecasting.

Long-Term Comparison

A comparison of the prices of Bitcoin and the S&P 500 side-by-side reveals a positive correlation since at least the beginning of 2018. This was around the time when the BTC price reached an all-time high. The ensuing decrease was similar and ended on Feb 5, 2018.  The entire downward move lasted for more than 300 days and ended in December 2018 for both. Until the December 2018 bottom, we can definitely state that the BTC and the S&P 500 prices have been correlated. What transpired afterward was a similar upward trend. This trend was steeper for BTC, however, which reached an initial high then gradually decreased until Feb 14, 2020. The movement after the December 2018 bottom presents the first divergence since the price of the S&P 500 increased gradually until Feb 24, 2020.

Current Movement

The price movement since the beginning of February has been almost identical, especially up until March 12. Both began February with a gradual increase that reversed by the end of the month. By March 12, both the price of BTC and the S&P 500 had decreased by 27%. However, while the S&P 500 price has held its ground, the BTC price has decreased by a further 18%, bringing its total loss since February to 43%. To conclude, the BTC and S&P 500 prices have had a significant correlation since 2018. The correlation is more pronounced in downward moves, while moves in both directions are more pronounced in the BTC price.