Apples and Oranges, Bitcoin and Stocks

I have never really understood why “Apples and oranges…” is supposed to mean, “Those two things are totally different!” Both are fruits. Both grow trees. Both are roughly round. Both make juice. You get the idea. Apples and oranges are much more alike than different.

But every time we highlight the correlation between bitcoin and US stocks, someone invariably says “Apples and oranges!” At one level, I totally understand the comment. We value stocks on earnings and interest rates. Bitcoin’s long-term value comes from incremental user interest and adoption. Those fundamentals are, indeed, different.

At the same time, there is one common link: the people that own each asset.The only requisite to own stocks or bitcoin is investable capital, and we suspect most bitcoin owners also own stocks and other financial assets. So it is entirely plausible to run the correlation numbers and see if common ownership creates common price action. Or, perhaps, bitcoin will earn its “Digital gold” nickname by exhibiting no sustained price correlation to US equities.

The recent global equity swoon makes for a great case study question: “Do bitcoin owners panic out of the crypto when their stock portfolios suffer?”The short answer is “No”. Here is the data:

  • The correlation between bitcoin and the S&P 500 for the 10 days ending last Friday (3/23) was -0.025.
  • Both assets saw losses over the period. Bitcoin was down 4.1%, and the S&P 500 was 5.5% lower. They just took their own paths lower and correlations declined as a result.

Looking at longer time horizons and including today’s market action for both the S&P 500 and bitcoin:

  • 30-day price correlations between bitcoin and the S&P 500 are -0.05 as of today’s close. They were much higher (+0.40) earlier in the month but declined noticeably as US equities lost their footing over the last 10 days.
  • 90-day price correlations are 0.16 between the two. As with the 30-day correlations, these were higher at the start of the month (0.24).

The conclusion here, supported by the graph below: bitcoin and US stocks seem to be going their own separate ways for now. Frankly, that makes sense. Stocks stumbled recently because of concerns over tariff and trade. Bitcoin is unencumbered by those issues, but has its own problems to address. Over the near term, we expect bitcoin and US stocks to trade largely independently of each other.

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