Glassnode and Coinbase report: Bitcoin maintains unique market path with low correlation to S&P 500

Quick Take

Bitcoin (BTC) had an impressive first quarter in 2024, posting a 69% return and outperforming most traditional asset classes. Despite the launch of BTC ETFs, which many thought would lead to a stronger correlation with traditional finance assets, BTC displayed minimal correlation with major asset classes, using data from a recent Glassnode and Coinbase Institutional report. This suggests its potential as a valuable component for diversification within a portfolio.

The report shows that Bitcoin negatively correlated with the DXY index and gold, while its correlation with the S&P 500 was low at 0.11. This suggests that Bitcoins price movements are largely independent of traditional markets. However, at the start of Q2, BTC is down 15% from its highs, coinciding with the DXY index rising above 106, further highlighting the negative correlation between the two.

The report also noted a decrease in Bitcoins volatility since January 2020, with peaks becoming less pronounced. Although volatility currently sits just under 60%, the report emphasizes a long-term downward trajectory despite occasional spikes above the trendline, mainly during 2020 and 2021. As Bitcoin continues to mature into a major asset class, its volatility is expected to continue to decline over time.