Bitcoin’s Correlation with US Stocks Hits 2-Year High: Impacts?

The correlation between Bitcoin and Wall Street has been increasing over recent months, recently reaching a multi-year high.

This surge is particularly noteworthy as several major US stock market indices hit new all-time highs this week.

Rising BTC-Wall Street Correction

The interest rate cut from the Fed last week had a positive effect not only on crypto but also propelled Wall Street upwards. Furthermore, Friday’s US macroeconomic data revealed that inflation has dropped to 2.2% from August of last year. This information stemmed from the Personal Consumption Expenditures Price Index, which many consider a more precise inflation measure for people.

The Dow Jones Industrial Average experienced an immediate boost, climbing from 41,921 to 42,616, marking a new all-time high. Although it dipped slightly by the end of the trading day, the Dow remained in positive territory.

The S&P 500 mirrored this performance, rising from 5,722 to over 5,760, achieving its own new ATH before closing at 5,738.

Conversely, the Nasdaq Composite was unable to surpass its ATH from July and ended the day with a minor downward adjustment.

Simultaneously, Bitcoin’s price soared past $66,500 on Friday, a milestone not reached in two months. Data from IntoTheBlock shows that these developments have strengthened the positive correlation between Wall Street and Bitcoin, elevating this metric to a two-year peak.

$BTC’s correlation with U.S. stocks reached a two-year high this week, a level that was only surpassed in the second quarter of 2022. pic.twitter.com/in6YRZq2Iw

— IntoTheBlock (@intotheblock) September 27, 2024

When Will BTC Reach a New ATH?

CryptoPotato recently highlighted that Bitcoin’s correlation with gold has also surged to its highest in months. The price of the yellow metal has been climbing frequently throughout 2024, with the latest peak recorded on Thursday at just under $2,690/oz.

This raises a pertinent question: when will BTC surpass its March all-time high of $73,800? Despite the high correlation with assets that have achieved such feats in a short span, BTC is still over 10% away from its record.

Historically, the fourth quarter has been notably favorable for the largest cryptocurrency, with an average return of about 90% over the past decade. Moreover, October and November are recognized as the two most bullish months for BTC, suggesting that a new all-time high could be imminent, especially given the current data.