Bitcoin Price Shows Tightening Correlation with the S&P 500 Index

Bitcoin Price Shows Tightening Correlation with the S&P 500 Index

The BTC price failed to cement the $48k support on Thursday, leading to a major correction towards the $45.5k level. At the time of writing, bitcoin is circling the lower $45k zone as bears continue to reject any move higher.

BTC Closes Q1 2022 Correlating with the S&P 500 Index

The recent price retracement has seen bitcoin close Q1 of 2022 on a slightly bearish note after sellers managed to erase all gains amassed earlier in the week. The monthly close below crucial support means the top crypto ends the quarter down 2%. Meanwhile, the S&P 500 closed Q1 down 5.5%, per data from TradingView.

The data points to a tightening correlation between the world’s largest digital asset and the S&P., which currently stands at 0.9. That is the closest BTC and the Index have even been to becoming perfectly correlated.

Even with the current bear market, BTC has gained nearly 9% over the past month, outpacing US stocks. However, numerous layer-1 tokens such as SOL, AVAX, and Terra have managed to outperform the benchmark crypto as mainstream hype around the Ethereum 2.0 launch continues to build.

Bitcoin to Decouple from Stocks and Bonds

Although the war in Ukraine has devastated stocks and crypto markets alike, there is a chance that BTC could rebound much faster than traditional investments.

In a recent interview with Yahoo Finance, Pantera Capital’s Dan Morehead expressed his wildly bullish sentiment over BTC. The CEO argued that the high correlation between the king coin and stocks is likely to decouple, with blockchain assets going up while stocks and bonds continue to dip.

Morehead attributed the increasing correlation between traditional investments and digital assets to the ongoing geopolitical turmoil in Europe and mounting FUD over the Fed’s decision to hike interest rates. However, he predicted that blockchain stocks will eventually decouple from the other asset classes, as they are entirely independent of the Fed pivot.

Analysts Discuss the Next Step for BTC Prices

Bitcoin’s recent pullback from highs of $48k to lows near the $45k level has slightly dented hopes of a return of the bull market. Failure by buyers to push the coin above the $47.5k level caused the prices to crash close to $45k on March 31. 

The turbulent movement has sparked a debate over bitcoin’s price trajectory in the coming weeks. Pseudonymous Twitter analyst IncomeSharks wasn’t shocked by bitcoin’s move lower on Thursday. He posted that dip was just a short-term correction before prices bounced back at the $45k trendline.

Meanwhile, market analyst Caleb Franzen discussed the next support levels that bitcoin traders should watch. The respected economist observed that the bulls are searching for support in the $42k to $45k range.

BTCFuel, a pseudonymous Twitter user and crypto analyst, shared a macro view of the bitcoin market. He argued that the current movement mirrored the 2012 price movement when BTC rebounded steadily after a period of sideways trading.

“After being up 28% in the last 2 weeks and breaking a major resistance, some sideways consolidation should be good for Bitcoin. In the next months, I believe that Bitcoin will move slow and steadily up like in 2012,” the analyst tweeted