Crypto S&P 500 Correlation Hits High After Fed Rate Cut: Bloomberg

Key points:

• Cryptocurrencies and U.S. stocks are now more closely aligned than at almost any time in recent years, according to a Bloomberg report on a new correlation study.
• This increasing positive correlation suggests that macroeconomic factors, particularly following last week’s Federal Reserve rate cut, are significantly influencing both markets, the report noted.

The Crypto S&P 500 correlation has risen to 0.67, indicating macroeconomic factors are affecting both markets. Analysts expect the trend to persist with favorable conditions for crypto.

Crypto S&P 500 Correlation Reaches Highest Level Since 2022

According to Bloomberg data, the correlation between cryptocurrencies and the S&P 500 has reached 0.67. This strong relationship suggests that U.S. macroeconomic factors, such as inflation and interest rates, are driving both crypto and stock market volatility.

Analysts expect the positive correlation to remain strong, especially as the U.S. economy heads toward a potential soft landing. A more favorable liquidity environment could also fuel the next crypto bull market.

Read more: Interest Rate Forecast Shows 70% of Polymarket Traders Predict Fed Cut

Positive Crypto S&P 500 Correlation Points to Market Uptrend

As the cryptocurrency market becomes more correlated with the S&P 500, recent macroeconomic events are impacting both assets. Bitcoin’s price rise mirrors that of stocks, indicating a growing correlation between the two.

With the Federal Reserve’s recent rate cuts and an improving liquidity environment, experts see further upside potential in the cryptocurrency market. Political developments, such as Kamala Harris’s endorsement of cryptocurrencies, are also seen as positive catalysts.