Bitcoin begins to live according to the laws of Wall Street

According to Nick Colas, co-founder of DataTrek Research, the 90-day correlation between daily cryptocurrency returns and the S&P 500 is 33 percent. This is the highest level since the cryptocurrency began attracting public attention in January 2016. In December, the figure was much lower at 19 percent.

One of the advantages of investing in cryptocurrency is the lack of correlation with established global financial markets. But as the US stock price fell last week, the price of bitcoin also fell slightly below $6,000.

"Bitcoin's appeal to institutional investors could increase correlations," analysts at Morgan Stanley said, raising the question of whether a higher correlation coefficient with stocks is limiting bitcoin's potential as an investment asset.

It is too early to say whether bitcoin can be a sustainable investment asset, given regulatory uncertainty and the fundamentally different nature of cryptocurrency compared to traditional assets. For now, if the correlation with stocks does exist, then a cryptocurrency like bitcoin could be an indicator of interest in risky assets like stocks.

“We're not talking about whether it's going to go up or down, we're talking about risk to the market, and that's very far off the risk spectrum,” said Christopher Harvey, head of equity strategies at Wells Fargo Securities. “And when risk is sold, that adds fuel to the fire and is a concern.”

On the other hand, “if we are right and risk begins to sell again, then we would not be surprised to see bidding in some cryptocurrency markets,” Mr. Harvey also noted.

Bitcoin was up 8% and its price was around $8,171 on Thursday afternoon, according to the CoinDesk price index. US stocks fell more than 2 on Thursday, according to the CoinDesk Price Index. percent.

This year, the S&P is down 1.7 percent, and Bitcoin is down about 40 percent.

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According to https://www.cnbc.com