Decoding Bitcoin vs Stock Market Charts for Smarter Investment Moves

Feb. 7, 2025

Author: Bitcoin Magazine Pro Team

When investing in Bitcoin, you struggle to understand the market's wild price fluctuations. To make sense of these dramatic moves, you would compare Bitcoin’s performance to that of traditional assets, like stocks. This helped you understand the bigger picture, and you quickly learned that while Bitcoin and the stock market often move in tandem, their charts tell different stories. The Bitcoin vs stock market chart remains a key component of your Bitcoin investment strategy. In this guide, you’ll learn how to analyze and interpret this chart to make more informed and strategic investment decisions.

Bitcoin Magazine Pro offers a Bitcoin analysis tool that can help you achieve your chart-reading goals. With this resource, you’ll better understand Bitcoin's price movements and their relationship to other traditional assets like stocks.

Is There a Bitcoin Price Correlation to the Stock Market?

btc infront of chart - Bitcoin vs Stock Market Chart

When financial markets move in sync with one another, they are considered to be correlated. For instance, if the price of one asset rises or falls and another asset moves in the same direction, they are said to be positively correlated. If the two move in opposite directions, they are negatively correlated. If price movements are unrelated, they are considered independent. 

Correlation is measured on a scale from -1 to +1. A correlation of 1 means the two assets move in perfect unison. A correlation of -1 means the two move in precisely opposite directions. A correlation of 0 means price movements are independent. In the case of Bitcoin, correlation shows how its price movements relate to other markets, such as the stock market. As an emerging digital asset, Bitcoin's correlation with stock prices has changed, especially as it has gained popularity and adoption.

Bitcoin vs the Stock Market: An Independent Asset Class

For the first several years of its life, there was almost no correlation between Bitcoin and the S&P 500. Until 2012, Bitcoin prices were very stable, while S&P 500 prices had their usual steady rise with some dips. The first significant Bitcoin jump, in late 2013 and early 2014, had no corresponding S&P 500 increase. 

The stock market dip in late 2016 happened simultaneously with a Bitcoin price increase. Bitcoin prices fluctuated rapidly, while S&P 500 price changes were less drastic. Peaks and valleys for Bitcoin and S&P 500 prices showed almost no similarities until 2018.

Bitcoin and Stock Market Correlation from Late 2021 to 2023

From late 2021 into 2022 and through 2023, Bitcoin prices rose and fell similarly to equity prices (albeit with much more volatility). The chart below shows Bitcoin's (BTC) price compared to the S&P 500 (SPX) and the Nasdaq Composite (ICIX) from November 2022 to November 2023.

corelation chart - Bitcoin vs Stock Market Chart

SPX is a measurement of the performance of large-cap stocks. ICIX measures the performance of 2,500 capitalization-weighted stocks on Nasdaq. You can see trends somewhat rising and falling with each other. However, Bitcoin demonstrates much more volatility, especially after significant events suggesting that Bitcoin is viewed and treated like a stock by traders and investors.

What Does it Mean for Investors?

Bitcoin's price correlation with equity could be a coincidence or indicate that its prices follow trends in equity prices. What does this mean for investors?

Because investors appear to treat Bitcoin like stocks, digital assets can react to market influencers like equities do. For example, on May 4, 2022, the Federal Reserve announced that it was increasing its target federal funds range to 0.75%–1%.

On May 5, 2022, Bitcoin fell to around $31,000. The Nasdaq 100 (NDX) lost about 1,400 points, and SPX lost about 150 points. The Bitcoin price was much more pronounced, but the effect was the same. Investors, as a whole, are also likely treating Bitcoin the way they treat equities temporarily. BTC is still in its price discovery phase, where the market is determining the role they will play. When they were first introduced, investors paid them no attention.

Approaching Bitcoin Investment with Caution and Professional Guidance

This means that investors should approach BTC cautiously. It is difficult to tell how the market and prices will act in the future. 

Bitcoin could remain correlated to equities, or they might not. If you're interested in investing in BTC, it's best to talk to a professional financial advisor who is familiar with them. They can help you determine what is best for your financial circumstances and investing goals.

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Interpreting Bitcoin vs. Stock Market Charts

btc going up - Bitcoin vs Stock Market Chart

Investors looking to gain from Bitcoin price movements must first understand how to read price charts. Price charts visually depict an asset’s historical price performance over time. Looking closely at Bitcoin and Nasdaq composite prices over the past four years, the Bitcoin correlation to the stock market is even more noticeable.

Based on Bitcoin vs. stock market charts, here are some key examples of Bitcoin’s correlation to the stock market.

  • December 2018: Both Bitcoin and Nasdaq prices drop to record lows. Bitcoin reaches $3,689 while Nasdaq is at 6,192.
  • June 2019: Bitcoin and Nasdaq both undergo a sudden, sharp price peak.
  • Feb. 2020: Bitcoin and Nasdaq reach record highs for the quarter before rapidly plunging.
  • March 2021: Values for both Bitcoin and Nasdaq soar to unusually high levels.
  • October 2021: After maintaining high prices for months, Bitcoin and Nasdaq prices both begin to drop, and do not recover for the rest of the year.
  • November 2021: Starting in November, Bitcoin's correlation to the stock market becomes even stronger. Since then, Bitcoin has been following Nasdaq movements almost identically as mining stocks soar in popularity.
  • May 2022: Both Bitcoin and Nasdaq experience a significant price drop, followed by a slight increase. By this point, Bitcoin is mirroring even small Nasdaq movements.

a graph - Bitcoin vs Stock Market Chart

What’s Causing the Bitcoin Stock Market Correlation? 

There's no single reason for Bitcoin’s correlation to the stock market. Based on Bitcoin vs. stock market charts, multiple factors contribute to the similarities. Like the stock market, Bitcoin is closely affected by supply, demand, and investor sentiments. 

Prices for both tend to rise when there’s high demand, positive market outlooks, and limited supply. Prices for both tend to drop when investors worry about the future or encounter worrying economic policies. It's no surprise that Bitcoin waxes and wanes with the stock market.That being said, some factors would seem to reduce the correlation. 

Bitcoin and Stock Market Correlation: Evolving Investment Trends

Bitcoin isn't under the same regulations and government policies as the stock market. For example, the 2021 Chinese government shutdown of Bitcoin mining affected Bitcoin prices but not the stock markets. Technological dissimilarities exist because the stock market isn't affected by data storage issues and power shortages, which affect Bitcoin miners.

So why are the recent charts still showing so much correlation? 

The answer lies in the increased connectivity of Bitcoin and stocks. With little reliance on the stock market, Bitcoin is no longer seen as a separate asset. Its popularity has made it very similar to traditional stock holdings. 

Growing Correlation Between Bitcoin and the Stock Market

BTC is no longer a niche asset traded by a few enthusiasts. Conventional brokerages and investment institutions are now handling it. The same investors tend to invest in both BTC and stocks. An investment portfolio may include both options. 

Spillover from Bitcoin returns often gets invested in the stock markets and vice versa. As the Bitcoin correlation to the stock market continues to increase, investors are becoming aware of the similarities and making even more decisions, assuming that Bitcoin and stock are identical. The close relationship between stock and BTC investing is causing both markets to mimic each other.

The Benefits and Dangers of High Stock Market Correlation 

What does the Bitcoin and S&P 500 correlation mean for the typical investor? There are both pros and cons to the Bitcoin stock market correlation. If there's a strong Bitcoin correlation, Bitcoin investing becomes a lot more predictable. 

When Bitcoin vs. stock market charts are similar, you can more easily notice market trends and make wise choices. Furthermore, since stock values always rise in the long run, a Bitcoin correlation to the stock market could mean more long-term gains for BTC investors.

Potential Benefits of Bitcoin Decoupling from the Stock Market

Though some benefits exist, you don't necessarily need to fear a Bitcoin stock market decoupling, which could be good news for investors who want to diversify their portfolios. 

Having two separate sets of assets that don't drop simultaneously is a great way to weather financial crashes. If the Bitcoin stock market decoupling does occur, people may have more opportunities to hedge against a crash.

Bitcoin-Stock Market Correlation: Impact on Investment Strategies

Whether or not a Bitcoin stock market decoupling is a “good thing” depends on your investment strategies. A high Bitcoin correlation to the stock market is a positive for those using stock market predictions to make Bitcoin trading strategies. 

Investors who haven't adequately diversified their portfolios might find that Bitcoin's correlation to the stock market makes them more vulnerable to market downswings.

Does Bitcoin Follow the Stock Market?

When dealing with investments, avoiding assuming that correlation = causation is important. The fact that Bitcoin vs. stock market charts look so similar doesn't necessarily mean one market drastically affects the other. In some cases, Bitcoin's correlation to the stock market seems coincidental. For example, the March 2019 dip in the stock market was due to increased aluminum tariffs, while the March 2019 dip in Bitcoin was due to international crackdowns on Bitcoin.

However, there’s also a lot of evidence that the stock market might directly influence Bitcoin. Experts have noticed that Bitcoin prices tend to drop when the stock market opens, irrespective of other factors affecting price. General investor confidence heavily affects Bitcoin's price, so recent Bitcoin crashes tend to come right after stock crashes. Bitcoin traders who start hearing news about a stock market downturn tend to begin trading conservatively.

Will Bitcoin Decouple From the Stock Market?

If your investment strategy has focused on Bitcoin following the stock market, you need to look for a Bitcoin stock market decoupling. Experts predict that such an event won't be happening anytime soon. As more and more people begin to conflate Bitcoin and stock market charts, the two assets are even more likely to affect each other. A mild correlation to the stock market seems likely to persist for the rest of the year.

That being said, some degree of Bitcoin stock market decoupling is inevitable. The main reason is that Bitcoin tends to be a little more volatile. In a sell-off, Bitcoin prices tend to plummet more drastically than traditional stocks and recover sharply. With stock prospects for the latter half of 2022 looking grim, there may be indications that Bitcoin’s value will begin to fluctuate at different rates than those of stock values.

Signs and Uncertainty of Bitcoin Decoupling from the Stock Market

It’s hard to tell if a Bitcoin stock market decoupling will be positive or negative for Bitcoin investors. Some feel that Bitcoin might stabilize while stocks drop; others believe its values may decrease even after the stock market recovers. Either way, signs that a Bitcoin stock market decoupling might be happening include:

  • Increased government regulation of Bitcoin
  • Loss of confidence in Bitcoin and decentralized finance
  • Increased numbers of token withdrawals
  • Stock prices continue to fall

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