In its early years, bitcoin had a reputation of being a portfolio diversifier relative to equities and sometimes referenced as digital gold or even an inflation hedge. However, since 2020, bitcoin has evolved from having no meaningful relationship with equities to a largely positive correlation as noted by both a static correlation matrix and rolling correlations. The closer ties come amid growing adoption of the cryptocurrency by institutions and retail traders alike.
This study explored the relationship between bitcoin (XBTUSD) and equities, represented by the S&P 500 Index (SPX) and the Nasdaq-100 Index (NDX), seeking answers to the following question: what factors may be causing the increased positive correlation of bitcoin to equities?
Examining daily returns (Figure 1) found the correlations to be 0.2 from January 2014 to April 2025. However, when parsed into smaller three-year periods, the correlations remained non-correlated in the initial two three-year periods. But in 2020, the correlations jumped into a positive relationship and generally sustained higher levels over the last five years.1
Figure 1. XBTUSD Daily correlations from Jan 2014 to April 14, 2025
Daily Correlation
SPX
NDX
1/2/14 to 4/14/25
0.20
0.20
1/2/14 to 12/30/16
-0.01
0.00
1/3/17 to 12/31/19
0.01
0.02
1/2/20 to 12/30/22
0.40
0.42
1/3/23 to 4/14/25
0.30
0.30
Source: Bloomberg Professional (SPX, NDX, XBTUSD), CME Economics Research Calculations
The data shows the correlations of XBTUSD to SPX and NDX are very similar. This implies that bitcoin correlations are not specific to one index, but more broadly across the equities spectrum.
Behavior of Rolling Correlations
Examining rolling correlations of XBTUSD to SPX and NDX offers a more in-depth assessment of the correlation behavior over time. Figure 2 suggests prior to 2020, the 60-day SPX and 60-day NDX rolling correlations were primarily ranged between -0.2 and 0.2. In early 2020, the correlation experienced a positive jump to about 0.5 while generally sustaining a higher correlation range of 0.0 to 0.6 over the last five years, with the most recent correlation in early April 2025 at about 0.48.
The 40-day SPX rolling correlation noted a similar behavior, but with more variance due to a shorter rolling period. Observing the longer rolling correlations smooths out the noise and variance of the shorter duration rolling correlations and may offer a better sense of the correlation behavior over time.
Figure 2: XBTUSD Rolling correlation to SPX and NDX
Source: Bloomberg Professional (SPX, NDX, XBTUSD), CME Economics Research Calculations
Based on the rolling correlations, the higher positive correlations are frequently evident during stressed market environments. For example, as noted in Figure 3, February to March 2020, when COVID-19 started; In 2022, when the Ukraine war started, and the Federal Reserve increased interest rates; from July to October 2023, and January to early April 2025. This would imply an asymmetrical correlation relationship, meaning the positive correlation frequently increases when the market environment tends to be stressed or when uncertainty increases. These moments suggest risk-off investor sentiment for bitcoin resembles equity market behavior.
Figure 3: Maximum market declines
Correlation
XBTUSD
SPX
NDX
Feb to March 2020
0.56
-53%
-35%
-30%
Nov 2021 to Dec 2022
0.69
-75%
-28%
-38%
July to Oct 2023
0.36
-20%
-14%
-12%
Jan to April 2025
0.48
-32%
-21%
-26%
Source: Bloomberg Professional (SPX, NDX, XBTUSD), CME Economics Research Calculations
As noted in Figures 4 and 5, the colored boxes in the Box and Whisker plots equates to about 50% of the correlation distribution. Below and above the box is the first and fourth quartiles (25% of the distribution on each side of the box). The whiskers at each end of the box shows the spread (minimum to maximum correlation) of the entire distribution. The X in the box represents the average correlation and the line in the box represents the median, which means 50% of the distribution is above the median and 50% is below the median.
Figure 4 shows several durations of rolling correlations of XBTUSD to SPX from 2017 to 2019. The shorter duration of rolling correlations has the widest spread of correlations as they are more sensitive to short-term movements. The periods longer than 20 days tend to have similar ranges as they smooth out the correlation data. However, regardless of the rolling length, the medians are very similar from 0.01 to 0.06, implying non-correlation of bitcoin to equities.
Figure 4: Box and Whisker plots of XBTUSD rolling correlations to SPX
Source: Bloomberg Professional (SPX, XBTUSD), CME Economics Research Calculations
Figure 5 observes the rolling correlations were noticeably higher. The medians increased to a range of 0.40 to 0.48. Figure 5 notes the correlation distributions are clustered closer to their respective maximum correlations, implying a bias towards a higher correlation.2
Figure 5: Box and Whisker plots of rolling correlations
Source: Bloomberg Professional (SPX, XBTUSD), CME Economics Research Calculations
Factors Driving the Correlation Shift?
The market data demonstrates the increased correlation. However, in research, a frequently asked question is, does correlation equate to causation? In this case, there are factors or variables that may be common to both equities and bitcoin as the causation, also known in statistics as confounding variables. The correlation is not caused by one asset impacting the movement of the other asset, but possibly a third variable related to both assets.
The factors may include:
In recent years, the growing acceptance of cryptos by institutions, investors, money managers, and traders thus leading to a continuing momentum of future allocation to digital assets. For example, from a January 2025 survey, 59% of institutional investors are seeking to increase their allocations to over 5% of assets under management in 2025 and 60% prefer exposure via registered products.3
With increased adoption of cryptos also comes the evolution of the asset and how users employ it into a portfolio. For example:
Crypto participants may simultaneously invest in both crypto assets and traditional investments and view cryptos as a subset of their overall investment portfolio.4
A 2022 Pew Research Center poll found 78% of crypto participants say they invest in cryptos as a different way to invest. Suggesting, a crypto allocation may be a substitute for other portfolio components.5
As noted in Figure 6, bitcoin’s daily standard deviation is roughly three to five times higher than equities and with the increased correlation in recent years, it begs the question, has bitcoin become more of an extension of a portfolio’s equity exposure by utilizing bitcoin as a beta allocation to adjust the portfolio’s sensitivity to equity returns? Like a high beta stock (which can move much more than the market both up or down), is the perception of a bitcoin as a riskier asset within a portfolio a sentiment indicator of risk on and risk off?
Figure 6: Daily Standard Deviations
Daily Standard Deviation
SPX
NDX
XBTUSD
1/2/14 to 4/14/25
1.12%
1.38%
4.27%
1/2/14 to 12/30/16
0.84%
1.01%
4.06%
1/3/17 to 12/31/19
0.81%
1.08
5.05%
1/2/20 to 12/30/22
1.60%
1.90%
4.33%
1/3/23 to 4/14/25
0.99%
1.33%
3.24%
Source: Bloomberg Professional (SPX, NDX, XBTUSD), CME Economics Research Calculations
The increasing acceptance of bitcoin can be noted in the reduction of bitcoin supply held at exchanges as supply has increased in other holders.6
As of March 2020, 17.8% 0f bitcoin supply was held at exchanges. It was recently reported at 12.8%.
U.S. ETFs hold about 5.8%, publicly listed firms hold approximately 3.8% of the supply spread across 94 public companies. Governments hold an estimated 2.6% of the supply.
As investors may need to raise cash in stressed or uncertain environments, bitcoin is relatively easy to liquidate, thus another possible driver for positive correlation during moments of market deleveraging. These selloffs imply bitcoin is not protected from scenarios of market fear.
One can argue, a combination of these factors may be influencing the shift to positive correlation.
Summary
Time will tell if a higher positive correlation regime of bitcoin to equities remains as cryptos are still in the early stages of its lifecycle. However, in recent years, the quantitative and qualitative data suggests the investors’ perception of bitcoin shifted in recent years towards greater acceptance and may perceive cryptos like other portfolio assets.
References
The last period is about 2.25 years.
The Box and Whisker charts for NDX have similar results.
All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
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All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
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