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

• Gold and the S&P 500 showed signs of recovery as BTC’s price continues to struggle
• Correlation gap at highest since FTX crash, with Silvergate news contributing

Over time, the degree of correlation between the traditional market and the crypto market has changed. 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 price change is added to the S&P 500 to get a better insight into 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

According to a new report from Sentiment, the S&P 500, gold and cryptocurrency prices no longer move in sync. Although 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 had started to recover from March 2 on the daily time frame chart. The rise came after several weeks of a downward trend, also visible on the chart.

The graph showed that since the rise started on March 2, it has increased by over 3%. It was sold for 4059 dollars, up approx. 0.16% at press time. A weak bull trend was also indicated by its relative strength index line when it crossed the neutral line to the upside.

Source: TradingView

And yet, over the same period, a look at BTC’s charts revealed that it has struggled to bounce back from its nearly 5% loss on March 3. It soon rose marginally, with the crypto trading at around $22,500.

The Relative Strength Index (RSI) line was below the neutral line, indicating that it has continued to struggle.

Source: TradingView

What the Charts Mean for Crypto Market Correlation

The current price difference between the two asset classes is what these two charts on the same timeframe have been able to show. Additionally, it demonstrated that the difference widened after BTC’s fall on March 3rd. In general, a drop in the price of BTC will usually affect 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 was a response to the growing scrutiny and clouded rules surrounding digital assets. As a result of the news, several associated projects and exchanges cut ties with the bank. It led to widespread panic as it underscored the departure of a major institutional player.

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

Source: CoinMarketCap

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The current correlation breakdown between traditional assets and the crypto market is the largest since the FTX collapse. The same is proved by Santiment and the lists mentioned.

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