Bitcoin Is Fairly Priced Relative To The Stock Market

Bitcoin Correlations Report, November 2024

Bitcoin is not an uncorrelated asset. Despite being a store of value, it typically trades in line with traditional risk assets. The key difference is that Bitcoin drives higher returns.

Its relationship with major risk assets tells us what phase of the market we're in and what to expect next.

Let's talk about it.

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Bitcoin Is Fairly Priced Relative To The Stock Market

The Takeaway

Bitcoin reached fair value relative to the NASDAQ after last month's breakout, marking the end of the mean reversion opportunity. However, historical patterns suggest significant upside remains.

Bitcoin continues to move in sync with the NASDAQ and gold, while showing no meaningful correlation to dollar strength or interest rates. This indicates current market movements are driven primarily by risk appetite rather than macro factors.

While Bitcoin's volatility remains at historical averages, its potential increase could challenge institutional investors as we approach a more exuberant market phase.

Key risks include a possible economic slowdown affecting risk appetite and institutional profit-taking if volatility rises substantially.

Bitcoin Managed To Catch Up To The NASDAQ