Bitcoin's ties to the performance of U.S. stocks appears to be increasing.
On a 90-day basis, the correlation between the daily percent returns of the cryptocurrency and the S&P 500 is 33 percent, the highest since the cryptocurrency started gaining public attention in January 2016, according to Nick Colas, co-founder of DataTrek Research.
The previous high of the last two years was much lower, at 19 percent, in mid-December 2017, Colas said in a Thursday note. The long-run average for the 90-day correlation is negative 1 percent, his analysis showed.Bitcoin soared 2,000 percent in the 12 months through December to well above $19,000, helped by a surge of investor interest and speculation about increased attention from institutions.
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Good point, I agree. Good one indeed.
I think it is easy to see that the S&P volatility over the past few years has been extremely low, based on historical average. The constant pumping of money due to artificially low interest rates has created many bubbles. The search for yield will eventually end up with a lot of significant damage across the investment spectrum.
The minute rigging stops, the 401Ks, pension funds, bond holders, REITs and many others will be a world of hurt. I hope cryptos stay uncorrelated and even inversely correlated to the legacy investment world.