Bitcoin shows a rising correlation with the S&P 500

• Bitcoin and the S&P 500 have shown similar price patterns over the past few months.
• The rise in correlation could be due to the entry of institutional players into the crypto market and the recent Fed rate cut.
• Bitcoin has surpassed more than 250 altcoins in the top 300 since the beginning of the year.

The price of Bitcoin (BTC) rose alongside the S&P 500 (SPX) on Thursday, reinforcing its bullish correlation with the index in 2024.

Bitcoin has largely moved in tandem with the S&P 500 in recent months

Bitcoin and the crypto market have been in an uptrend since Wednesday following the decision by the Federal Reserve (Fed) to cut interest rates by 50 basis points. Bitcoin is up nearly 3% over the past 24 hours, briefly rising above the $63,000 level for the first time in three weeks.

Since hitting a low of $53,300 on September 6, Bitcoin has risen more than 17%, adding a market cap of more than $200 billion.

However, the recent rally is not specific to Bitcoin and cryptocurrencies only, as US stocks have also been on an upward trend.

Since the Fed announced the rate cut, the S&P 500 has added nearly $1 trillion in market capitalization. Like Bitcoin, the index has also seen an impressive recovery from its September 6 low, gaining more than $3 trillion in market capitalization.

In addition to bullish seasons, Bitcoin and the S&P 500 have followed the same pattern during recent bearish periods. The index fell nearly 10% days after the “yen trade” unraveled. During the same period, Bitcoin fell below $50,000

The move underscores Bitcoin’s rising correlation with the S&P 500 in recent months.

BTC/USDT vs SPX

A potential reason for the rising correlation could be traced to the increased participation of institutional players in the crypto market through the launch of Bitcoin and Ethereum Exchange Traded Funds (ETFs). In addition, the anticipation and eventual Fed rate cut is expected to see investors deploy capital into risk assets such as crypto and equities, causing a potential simultaneous rise in both assets.

Although the correlation exists for now, it is important to note that it can change unexpectedly, especially due to the somewhat unclear regulatory hurdle facing Bitcoin and the highly speculative behavior of most crypto investors.

Meanwhile, a recent chart by @MustStopMurad on X shows that only 42 cryptocurrencies out of the top 300 have outperformed Bitcoin since the beginning of the year. He also pointed out that most of the 42 cryptocurrencies were recently launched tokens and the others were mostly meme coins. As a result, Bitcoin has proven to be a better bet than the larger percentage of reputable altcoins.