The correlation of the Bitcoin shares increases after decoupling from Wall Street in the middle of the FTX drama

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During the BTC Prize about the news from Alameda-ftx and Genesis-Gemini crashed, he coupled from the S&P 500 Index and the Nasdaq Composite. But after the crypto exchange markets had priced the news, they were ready to recover with shares.

Due to the Bitcoin share correlation, the price on the crypto stock market markets moves parallel to technology shares such as Tesla (Nasdaq: TSLA).

Jake Gordon from the Bespoke Investment Group said:

"It seems to me that Bitcoin in sympathy is moving up with stocks/risk systems. The most interesting thing is that the run in Bitcoin has also come from a very narrow area since all of the FTX saga. The next few days will be a good test if we get the December high stalls out."

This shows that even several colossal crypto starting errors are not sufficient to keep the Bitcoin price low for a long time. But what it particularly shows is that the correlation of the Bitcoin shares becomes a secular trend.

The correlation of the Bitcoin shares rose to a record high

in December

The only question is how much more bitcoin compared to stocks will increase or fall in most periods. And how long will this regime take - a few more months, years or decades?

Analysts of the provider of cryptodata and knowledge Kaiko wrote in a note at the beginning of this month:

"[in 2022] The correlation of Bitcoin with the S&P 500 reached both an all-time high and fell to a 15-month low. The deep stalls were reached during the collapse of FTX, while the highs appeared in the last week of December. This is the best evidence that macro is back."

The analysts of Kaiko suggested that the correlation are driven by the global macro interest environment. They found that one year with interest increases of the central bank had been the least friendly for risk systems such as crypto and technology shares for some time.

When will the bear market of S&P 500 and Nasdaq end?

The fact that the correlation of Bitcoin shares has dropped during the FTX crisis makes sense. It was a localized event in the cryptos sector that drastically lowered crypto prices. So we can see that the period of the insolvency crisis appears in the correlation diagram of the Bitcoin shares.

But the fact that it was not only resumed, but then reached an all-time high, says two things: It indicates that Bitcoin will slightly shake off the FTX collapse.

This practically passed in the correlation charts like a runaway. So that is overall Bullish and long -term for Bitcoin. The markets understand that the scandal was the problem of Alameda-ftx, not that of Bitcoin.

What it also tells us is that the Bitcoin macro connection is now a solidified fact of our financial reality. With these many months of the tightening correlation, which would have been even narrower without the bankruptcies this year, the Bitcoin price and the share level seem to be inextricably linked.

Bitcoin is primarily a macroinvestment. When the interest rates are high, the capital flows to the interest rate in lending. If you are low, it flees from tradfi and searches for returns in risk systems such as stocks and crypto.

The big question is, when will the soil be reached for the S&P500? The low point of the Bitcoin price will probably be somewhere nearby. Nobody can be sure, but the average time that the S&P 500 has spent in historical bear markets is 13 months. If it applies to the current market, it means someday in 2023.

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