Bitcoin and the US stock market have been highly correlated recently, will it continue?

Normally, bitcoin isn't correlated with much of anything.

Looking back at bitcoin's entire history we get some slightly positive correlations with gold, but that is about it.

From 2013 to 2018, bitcoin showed literally zero correlations to US stocks:

(Source: https://www.valuewalk.com/2018/02/bitcoin-correlation-assets-diversify/)

But if we zoom in a bit we see a slightly positive correlation with stocks over the past year or so...

If we zoom in a lot more, things get a bit more interesting...

Over the past couple months, bitcoin has moved almost in lockstep with US stocks, showing an extremely high correlation.

What do I mean by that?

Well, check this out:

(Source: https://www.tradingview.com/symbols/BTCUSD/)

Basically ever since February, bitcoin and the US stock market has been mostly joined at the hip.

When stocks go up, bitcoin does well, when stocks dump, bitcoin dumps as well.

What does this mean going forward?

That is the 64 thousand dollar question!

Stocks have been doing extremely well ever since bottoming, and one could say bitcoin has as well after falling all the way to $3.8k, though that may or may not have been caused/exacerbated by issues at Bitmex during the crash...

That being said, if stocks continue to do well in the coming days and weeks it is reasonable to expect bitcoin to do well as well.

Though, there is no guarantee that stocks will continue to do well over the coming days and weeks.

We are most likely past the "extreme fear" portion of this current crisis for risky assets (stocks and bitcoin included), which probably means the lows are already in, even if we aren't completely out of the woods just yet.

Also giving some credence to the positive bitcoin thesis in the near term, is the CME gap that is still yet to be filled...

(Source: https://cointelegraph.com/news/76b-sitting-in-stablecoins-is-this-bullish-or-bearish-for-bitcoin)

If you have followed or traded any of the CME gaps over the past couple years, you know that they have an extremely high likelihood of filling.

I don't have the exact numbers in front of me, but last time I checked something like 90% of all CME gaps are filled eventually, which makes for a pretty reliable trading pattern if you are patient enough.

Also, the halving is now only a matter of weeks away, which historically has been incredible bullish for bitcoin.

Add all these things up and continued upward movement in the very near term seems rather likely, unless of course stocks fall out of bed again and drag bitcoin down with them! :)

Stay informed my friends.

-Doc