Bitcoin [BTC]gold, S&P 500 and a case of increasing correlation

  • Gold and S&P 500 showed signs of improvement as BTC price continues to struggle
  • Correlation gap at its highest since the FTX crash, also contributed by the Silvergate news

Over time, the degree of correlation between the traditional market and the crypto market has shifted. Both open questions are how much the gap widened and what caused the prevailing correlation.

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The crypto-SPX correlation is the relationship between the price of Bitcoin or Ethereum and the S&P 500 index – a standard measure of stock market performance in the United States. Gold’s price change is added to that of the S&P 500 to better understand the divergence. The price trends of conventional assets and cryptocurrencies are compared to determine if they follow a similar pattern.

The current state of correlation

This is according to a new report from Sanitation, the S&P 500, gold and cryptocurrency prices are no longer moving in sync. While cryptocurrencies such as Bitcoin and Ethereum continued to struggle on March 6, the study indicated that gold and the stock market saw some improvement.

Source: Sentiment

The S&P 500 began a recovery on March 2 on the daily timeframe chart. The recovery came after several weeks of a downward trend, also visible on the chart.

The chart showed that it is up more than 3% since the recovery on March 2. It sold for $4,059, up about 0.16% at the time of writing. A weak bull trend was also indicated by the line of the Relative Strength Index as it crossed the neutral line to the upside.

S&P 500 price movement

Source: TradingView

And yet, during the same period, a look at BTC’s charts revealed that it was struggling to bounce back after losing nearly 5% on March 3. It soon gained marginally, with the crypto trading at around $22,500.

The line of the Relative Strength Index (RSI) was below the neutral line, indicating that things are still difficult.

Bitcoin (BTC) price movement

Source: TradingView

What the charts mean for crypto market correlation

The current price difference between the two asset classes is what these two charts have been able to show in the same time frame. Moreover, it showed that the difference widened after BTC’s decline on March 3. In general, a fall in the price of BTC usually affects the price of almost most cryptocurrencies.

The Silvergate episode

Silvergate, a crypto-friendly bank, has been in the spotlight for the past week due to its failing health. There were reports that the bank has changed its stance on cryptocurrencies. The change came in response to the growing scrutiny and hazy rules around digital assets. As a result of the news, several related projects and exchanges cut their ties with the bank. It sparked widespread panic as it underlined the departure of a major institutional player.

The cap of the broader crypto market took a major hit due to the fear, uncertainty, and doubt (FUD) that followed the Silvergate incident.

Crypto Market Cap

Source: CoinMarketCap

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The current correlation break between traditional assets and the crypto market is the largest since the collapse of the FTX. The same is evident from Santiment and the above charts.

alreadywhile digital asset investors are crossing their fingers for better times, those who own both types of assets seem to have a more diversified portfolio right now.

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