Bitcoin's correlation with US equities hits decade low as rate path debate intensifies
The relationship between Bitcoin ($BTC) and US equities has drifted to its most negative reading in more than a decade, sharpening a debate about whether the cryptocurrency is pricing monetary policy rather than growth. Bitwise,…
Key takeaways
- Bitwise reports Bitcoin's rolling 260-day correlation with the S&P 500 has fallen to roughly minus 0.6, its most negative reading in more than a decade and a level last seen in 2015.
- Bitcoin is trading at $78,417, down 1.46% in the past 24 hours after climbing from roughly $64,000 to briefly above $82,000.
- Bitwise argues Bitcoin is more sensitive to monetary policy expectations while equities are more tied to global growth expectations, explaining the current decoupling.
- Markets price a 60.4% probability of a rate increase at the Federal Reserve's September 16 meeting, according to the FedWatch tool.
- Short-term signals have turned cautious, with more Bitcoin moving to exchanges, declining unrealized profits, rising put-to-call volumes, and 95% of Bitwise-covered altcoins outperforming Bitcoin in the past week.
The relationship between Bitcoin ($BTC) and US equities has drifted to its most negative reading in more than a decade, sharpening a debate about whether the cryptocurrency is pricing monetary policy rather than growth. Bitwise, in a new market report, found that Bitcoin's rolling 260-day correlation with the S&P 500 has fallen to roughly minus 0.6. That matches levels last seen in 2015, the year that preceded a rally in Bitcoin of roughly 9,800% through late 2017, though Bitwise cautioned that a comparable repeat looked unlikely given Bitcoin's far more advanced stage of adoption.
Decoupling and the rate read-through
At $78,417, Bitcoin has pulled back 1.46% in the past 24 hours after climbing from roughly $64,000 to briefly above $82,000. The move still leaves Bitcoin and Ether both ahead of the S&P 500 over recent weeks. According to Bitwise, the two cryptocurrencies reversed in less than a fortnight a performance deficit of roughly 20% relative to equities that had persisted through the end of July.
Against the backdrop of that outperformance, Bitwise draws a line between what drives each asset class. Bitcoin, the firm argues, is more sensitive to monetary policy expectations, while equities remain more tethered to global growth expectations. That distinction helps explain the current decoupling. If growth expectations continue to soften, equities could face additional pressure. Bitcoin could benefit, Bitwise argues, if weaker growth simultaneously strengthens the case for rate cuts.
The firm also flagged that decoupling episodes in Bitcoin's history have rarely held for long. On balance, significant declines in Bitcoin have often preceded larger corrections in equities.
September 16 and the bond yield channel
The Federal Reserve's September 16 meeting is, in Bitwise's view, a potentially decisive near-term variable. Markets currently price a 60.4% probability of a rate increase, according to the FedWatch tool. Fed chair Kevin Warsh's signals about the number of further potential hikes will carry weight.
Bitwise noted that bond yields could deliver effective tightening even without a formal Fed move. If yields continue rising, financial conditions tighten without the committee acting at all.
Short-term positioning signals have turned cautious. Larger quantities of Bitcoin are being transferred to exchanges, a development that can precede selling pressure. Unrealized profits have declined and put-to-call volumes have risen, pointing to greater demand for downside protection. Ninety-five percent of the altcoins in Bitwise's coverage universe outperformed Bitcoin in the past week, another sign of rotation within the sector.
The macro caveat shadowing the broader cycle is plain: bond yields rising faster than the Fed acts could tighten conditions into the September 16 meeting, whatever the committee decides.
Related reading
Source · 來源