Data from Arcane Research has revealed that Bitcoin’s (CRYPTO: BTC) correlation with equities has hit a high last seen in October 2020.
What Happened: According to a report seen by Decrypt on Wednesday, Bitcoin’s 90-day correlation with the S&P reached 0.49 on March 18.
"Bitcoin's correlation to the S&P 500 has only been higher for five days in BTC's history, showing that the current correlation regime is unprecedented in BTC's history," stated the report.
The market-leading digital asset’s correlation with the broader crypto market also reached 0.91, a high last seen during the bear market of 2018 and 2019.
Correlations in the crypto market are nearing all-time highs after rising steadily over the past year and are now approaching the highs from the bear market of 2018/2019.
— unfolded. (@cryptounfolded) March 23, 2022
h/t @ArcaneResearch pic.twitter.com/HisMz25sx3
Why It Matters: The strengthening relationship between Bitcoin and traditional stocks has led market participants to question the narrative that Bitcoin is a suitable hedge against inflation.
"I wish I could say that crypto is really responding to fundamentals [high inflation], but I think the chief fundamental here is the crypto is responding to the rise in equity prices," said Bannockburn Global Forex’s managing director Marc Chandler to CoinDesk TV.
Chandler noted that the correlation between Bitcoin and the Nasdaq is now over 0.60.
See Also: Bitcoin Isn’t Currently An Inflation Hedge Says Chainalysis
Price Action: At press time, Bitcoin was trading at $42,800, up 2.30% in the last 24 hours. Ethereum (CRYPTO: ETH) was trading above $3,000, gaining 3.09% over the same period.
Dogecoin (CRYPTO: DOGE) was trading at $0.135, rising by nearly 12% over the last day.
