The S&P 500 Index (SPX) and the Bitcoin exchange rate and show a positive correlation for most of the current year. After a two-month break, the correlation of the two assets again approached record highs.
Since the beginning of the year, the Bitcoin exchange rate and the American S&P 500 index spent most of the time in a positive correlation, as shown in the bottom of the graph. Levels below zero indicate a low correlation, while a unit indicates a close correlation. The middle of the range, respectively, is presented as a mark of 0.5.
Since the beginning of the year, three main periods with a high correlation of two assets have been recorded:
- January 9-31
- February 16 – April 6
- From June 13 to the present
Conversely, periods of low correlation were recorded on the following dates:
- January 31 – February 16
- April 6 – June 13
After a long period of lack of correlation, the two assets returned to the relationship, which should remain at least in the near future.
Well-known trader and technical analyst @Caprioleio He also believes that Bitcoin and the S&P 500 repeat the dynamics of each other again, and the correlation level is near record highs:
Correlation is again at historic highs. Have you noticed this trend? High levels of fear and uncertainty lead to a closer relationship between the two assets.
Below we analyze the dynamics of both assets and try to determine their prospects.
Following the line of upward support, the S&P 500 has been growing since March 13, when the index groped the bottom. Now quotes have encountered resistance of $ 3150, where the level of 0.79% Fibonacci retracement relative to the previous bearish move also passes. Initially, the price exceeded this mark, but could not maintain the upward momentum and retreated.
Since the line of upward support and the area of resistance coincide, we can soon expect a significant breakthrough in one direction or another. In general, both options are possible, but an upward breakthrough seems more likely due to the bullish intersection of the 50- and 200-day moving averages, which act as support.
Bitcoin pierced the figure of the descending wedge on June 22. However, the breakthrough occurred at low trading volumes, and since then quotes have unfolded at the initial levels. Perhaps this is just a retest of the wedge, but the impulse to decline and low trading volumes at the breakthrough do not speak in favor of such a scenario.
If the SPX index continues to grow and carries Bitcoin along, the cryptocurrency exchange rate will go to the resistance area of $ 9900.