Bitcoin is no longer the magic internet money that it’s long been branded. But by being less, it could actually be much more
As bitcoin’s price appears to be correlating withtraditional markets, it’s undergoing an identity crisis that could kill it, or see it evolve.Bitcoin is no longer the magic internet money that it’s long been branded. There are no dark forces causing it to behave the opposite of traditional markets. There is no algorithm that forces it to zig when the rest of the world zags.
There’s a couple problems with that narrative though. If bitcoin’s value was being driven by it being a non-correlated asset, then the moment it did correlate, its value should have gone down towards zero. Nevertheless, bitcoin’s price has already started to recover, right along with traditional markets, increasing by 16% over the most recent 24-hour period.
Then, over the counter trading became a thing. Grayscale paved the way in 2015 by securitizing bitcoin and other cryptocurrencies, letting accredited and institutional investors who might not otherwise be legally allowed to touch the asset gain exposure.
The following day, those actions had aligned bitcoin’s movements with the S&P 500 more than it had ever been before, based on CoinMetric’s calculation of what is called the Pearson correlation, which shows the similarity between two sets, and has stayed at about that level for the past five days, according to the firm.
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