Recent data shows a significant strengthening in the correlation between Bitcoin and the S&P 500, interpreted by analysts as a reaction to waning confidence in the US dollar and broader fiat currency risks, rather than Bitcoin transitioning into a conventional risk asset.
Bitcoin’s 30-day correlation coefficient with the S&P 500 has risen above 0.4, reaching its highest point since 2020. This heightened alignment suggests both markets are responding primarily to diminishing faith in the stability of the US dollar.
Simultaneously, the US Dollar Index (DXY) fell to a 12-month low. During this period of dollar weakness, Bitcoin surged 9% while the S&P 500 rallied 6%, underscoring their joint appeal as perceived havens against fiat currency instability.
This trend occurs amid ongoing global de-dollarization efforts. Observers note actions by BRICS nations, including significant gold acquisitions and reductions in US Treasury holdings, are contributing to pressure on the dollar’s long-standing dominance.
Analysts argue the correlation reflects investors using both Bitcoin and equities as hedges against fiat fragility. Evidence includes historically elevated valuations in the S&P 500 price-to-sales ratio, indicative of similar investor behavior seeking dollar alternatives.
The connection highlights concerns about underlying fiat system vulnerabilities. Historical precedent supports this view; Bitcoin visibly decoupled from equities during the 2023 US regional banking crisis, demonstrating its distinct characteristics emerge during specific financial system stresses.