The latest analysis that Mati Greenspan released could indicate that Bitcoin is no longer correlated with the S&P 500 index.
One of the most important elements to predict the price of Bitcoin is its correlation with traditional financial markets. If this correlation exists, it would be possible to predict the direction of Bitcoin’s price by observing the trends in the stock market.
However, not everyone agrees with this theory. This is the case of Mati Greenspan, who says that Bitcoin is no longer correlated with the S&P 500.
Problem with Bitcoin’s Price
The issue of the correlation between Bitcoin and the S&P 500 has been around the crypto world for several years now. Many cryptocurrency users consider that this is not a minor matter, since one of the foundations for BTC’s success has been its quality as a store-of-value asset. It would automatically lose this capacity if there were a correlation between the index and the cryptocurrency.
The great attractiveness of a store-of-value asset is that there is no relationship between its price and the traditional financial market. In this sense, in the face of an economic or political crisis that causes the markets to collapse, the store-of-value-asset will maintain or even increase its price. Precious metals such as gold have shown that behavior throughout the centuries.
Therefore, if there is a correlation between Bitcoin and the S&P 500 index, a large part of the crypto community would have to reconsider the role of the cryptocurrency within the international economy.
This is a debate for which figures from the crypto world have demanded, such as the case of Vitalik Buterin. He has advised focusing more on the capabilities of BTC as a means of payment, and less on its supposed quality as a haven of value.
Greenspan Sees No Correlation with S&P 500
In any case, the correlation between Bitcoin and the S&P 500 continues to be a matter of debate among crypto world analysts. Mati Greenspan recently stated that the levels of correlation between the cryptocurrency and the index have fallen significantly. That has happened since the crash in the markets at the beginning of the coronavirus pandemic.
On August 5th, Greenspan said that cryptocurrencies are “once again able to demand their independence from traditional markets.” To support his position, he showed a graph that reflects the correlation between BTC and the S&P 500 index. In it, it is possible to observe that it reached its highest point at the beginning of the year, to fall sharply since then.
Mati Greenspan explained that “earlier this year, the correlation rose to 0.6 due to the sale of multiple assets at the start of the pandemic.” However, he said that they are now “below 0.2 again, which means that there is no longer any correlation on a day-to-day basis.”
Not everyone agrees with the position that Bitcoin is no longer correlated with the traditional financial market. However, if Greenspan’s analysis were correct, this would mean that those who say that BTC is indeed a store-of-value asset would have new arguments to defend their position.
By Willmen Blanco