Correlation (crypto and stocks)

The correlation coefficient compares the daily or weekly returns of two assets over a rolling window, such as 30 or 90 days. A value near +1 means they rise and fall together, near zero means no consistent link and near -1 means they move in opposite directions. Analysts track bitcoin's correlation with the Nasdaq, the S&P 500, gold and the US dollar index.

For years bitcoin had almost no correlation with traditional markets, which supported the case for it as a diversifier. From 2020 onward, as institutional money arrived and interest rates became the dominant driver, its correlation with tech stocks rose markedly, especially during selloffs. Within crypto, most altcoins remain highly correlated with bitcoin.

Correlation is unstable and backward-looking. It can jump toward 1 in a crisis, exactly when diversification is needed most, and fall in calmer periods. It also measures only linear co-movement over the chosen window, so headlines claiming bitcoin has decoupled often rest on short and noisy samples.