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5.12[Market Insights & Analysis](https://wealtii.com/learn)

# Crypto and Stock Market Correlation: What the Data Shows

By [Zayd Ahmed](https://wealtii.com/editorial-policy#zayd-ahmed), Founder & CEO, Wealtii · Published 11 August 2026 · Last reviewed 21 October 2026

**Crypto's correlation with the stock market** measures how closely prices such as Bitcoin's move with indices like the S&P 500. Before 2020 it was near zero (0.01 in 2017–19, per the IMF). It has been clearly positive since: LSEG data put Bitcoin's average 2025 correlation with the S&P 500 at 0.50, up from 0.29 in 2024.

## What does correlation between crypto and stocks measure?

A correlation coefficient runs from −1 to +1. At +1, two assets always move in the same direction on the same days; at 0, their daily moves are unrelated; at −1, they move in opposite directions. As a rough guide, readings below 0.3 are weak, 0.3 to 0.7 moderate and above 0.7 strong. The figure is usually calculated on daily returns over a rolling window, such as 30 or 90 days, so it changes with the window chosen.

Correlation says nothing about the size of moves, and it shows association, not cause. Bitcoin's three-year volatility of about 44% is roughly three times the S&P 500's 15% (justETF, in euro terms, accessed 21 Oct 2026). So even when the two move in the same direction, Bitcoin usually moves much further.

## How has Bitcoin's correlation with stocks changed since 2017?

| Period | Measure | Correlation | Source |
| --- | --- | --- | --- |
| 2017–2019 | Bitcoin vs S&P 500, daily returns | 0.01 | IMF (Jan 2022) |
| 2020–2021 | Bitcoin vs S&P 500, daily returns | 0.36 | IMF (Jan 2022) |
| 2020–2021 | Bitcoin vs MSCI Emerging Markets | 0.34 | IMF (Jan 2022) |
| 2024 | Bitcoin vs S&P 500, annual average | 0.29 | LSEG via Reuters (Dec 2025) |
| 2024 | Bitcoin vs Nasdaq 100, annual average | 0.23 | LSEG via Reuters (Dec 2025) |
| 2025 | Bitcoin vs S&P 500, average to early December | 0.50 | LSEG via Reuters (Dec 2025) |
| 2025 | Bitcoin vs Nasdaq 100, average to early December | 0.52 | LSEG via Reuters (Dec 2025) |
| 2018–2024 | Rolling correlation with US indices, peak | Up to 0.87 (2024) | Wu, arXiv (Jan 2025) |

The direction is clear: from near zero before 2020 to moderately positive since, with short spikes much higher. The IMF also found that the correlation between Bitcoin and the MSCI Emerging Markets index in 2020–21 was 17 times its earlier level, so the shift was global rather than a US story.

## Why do Bitcoin and the stock market move together?

- **Shared investors.** Hedge funds, asset managers and retail brokerage clients now hold both, and US spot bitcoin ETFs, trading since January 2024, put bitcoin into ordinary brokerage accounts. When these investors cut risk, they tend to sell both.
- **Interest rates and liquidity.** Both markets are sensitive to borrowing costs. In 2022, as the Federal Reserve raised rates from near zero, Bitcoin fell about 65% over the calendar year (Coin Metrics daily closes).
- **Forced selling in stress.** The IMF found that return and volatility spillovers between Bitcoin and US stocks intensify during turmoil such as March 2020. During the pandemic, Bitcoin's volatility explained about one-sixth of S&P 500 volatility.
- **Macro shocks.** US tariff announcements hit both markets in April and October 2025; Bitcoin closed at $76,351 on 8 April 2025 (Coin Metrics). Reuters reported that those sell-offs highlighted Bitcoin's link with equities, particularly AI-related stocks.

## When does crypto move independently of stocks?

Crypto-specific shocks can break the link. The Terra/Luna collapse (May 2022) and the FTX bankruptcy (November 2022) began inside the crypto industry. The leverage unwind of 10–11 October 2025, which liquidated more than $19 billion of positions in 24 hours (CoinDesk Research), started with a tariff headline that also hit stocks but was amplified by crypto's own borrowing. How strongly crypto tracks stocks also varies across [crypto market cycles](https://wealtii.com/learn/crypto-market-cycles).

The "decoupling" theory holds that Bitcoin will behave more like digital gold as it matures. So far, the correlation data point the other way: in sell-offs Bitcoin has generally traded as a high-volatility risk asset. That could change, but it is a hypothesis, not an observed trend. Investors who want an asset with different drivers often look at gold, which has a much longer record; see [holding Bitcoin and gold together](https://wealtii.com/learn/invest-in-bitcoin-and-gold-together).

## What does crypto–stock correlation mean for diversification?

Correlation matters most when you combine assets. The illustration below adds a slice of Bitcoin to a stock portfolio and shows how the result depends on correlation:

| Bitcoin share of portfolio | Volatility if correlation = 0 | Volatility if correlation = 0.5 |
| --- | --- | --- |
| 0% (stocks only) | 15.5% | 15.5% |
| 2% | 15.2% | 15.6% |
| 5% | 14.9% | 15.9% |
| 10% | 14.6% | 16.6% |

At zero correlation, a small Bitcoin slice slightly lowers overall swings. At 0.5, roughly the 2025 average, it raises them. Correlations also tend to rise in crashes, exactly when diversification is needed. A practical approach is to treat crypto as a high-volatility, equity-like holding within a wider [crypto portfolio allocation](https://wealtii.com/learn/portfolio-allocation-strategy) plan, and to understand [what causes crypto volatility](https://wealtii.com/learn/what-causes-crypto-volatility) before choosing a size.

Wealtii's [Multi-Asset Balanced Allocation Fund](https://wealtii.com/funds/wealtii-multi-asset-balanced-allocation-fund) mixes crypto (TRON 19.9%, Bitcoin as BTCB 7.3%, XRP 7.2%, BNB as WBNB 7.1%) with Tether Gold (XAUT, 19.1%) and tokenized ETFs tracking the S&P 500 (SPYon, 19.8%) and silver (SLVon, 19.6%), at target allocations as of 21 October 2026. Because it holds S&P 500 exposure directly, it does not avoid stock-market correlation; it spreads risk across assets with different drivers. The tokenized ETFs give economic exposure only, with no shareholder voting rights (see [how Ondo tokenized stocks work](https://wealtii.com/learn/ondo-tokenized-stocks-explained)), and may not be available in all jurisdictions, including the United States.

## Frequently Asked Questions

### Is crypto correlated with the stock market?

Yes, positively but not perfectly. LSEG data reported by Reuters put Bitcoin's average 2025 correlation with the S&P 500 at 0.50 and with the Nasdaq 100 at 0.52. Before 2020 the relationship was close to zero: the IMF measured 0.01 for 2017–19.

### Why does Bitcoin fall when stocks fall?

Many of the same investors now hold both, so when they cut risk they sell both, and leveraged crypto positions can be force-sold. Changes in interest rates and liquidity also hit both markets. The IMF found that these spillovers intensify during periods of market stress.

### Is Bitcoin more correlated with the Nasdaq or the S&P 500?

In 2025 slightly more with the tech-heavy Nasdaq 100 (an average of 0.52, against 0.50 for the S&P 500), according to LSEG data reported by Reuters. In 2024 the order was reversed: 0.29 for the S&P 500 and 0.23 for the Nasdaq 100.

### Does adding crypto to a stock portfolio diversify it?

Only partly. At a correlation of about 0.5, crypto still moves differently from stocks some of the time, but it is roughly three times as volatile, so even a small allocation tends to raise overall portfolio swings. Correlations also tend to rise during crashes, when diversification matters most.

## Sources & References

1. [IMF Blog — Crypto Prices Move More in Sync With Stocks, Posing New Risks (Adrian, Iyer and Qureshi, 11 Jan 2022)](https://www.imf.org/en/Blogs/Articles/2022/01/11/crypto-prices-move-more-in-sync-with-stocks-posing-new-risks) (accessed 21 Oct 2026)
2. [Reuters (via The Globe and Mail) — Bitcoin’s 2025 rollercoaster may end on a low (Hannah Lang, 9 Dec 2025; LSEG correlation data)](https://www.theglobeandmail.com/investing/article-bitcoins-2025-rollercoaster-may-end-on-a-low) (accessed 21 Oct 2026)
3. [Di Wu — Institutional Adoption and Correlation Dynamics: Bitcoin’s Evolving Role in Financial Markets (arXiv:2501.09911, 17 Jan 2025)](https://arxiv.org/abs/2501.09911) (accessed 21 Oct 2026)
4. [justETF — S&P 500 vs Bitcoin: volatility and drawdown comparison](https://www.justetf.com/uk/asset-comparisons/index-comparisons/sp-500-vs-bitcoin) (accessed 21 Oct 2026)
5. [Coin Metrics — Community network data (BTC daily reference price)](https://coinmetrics.io/community-network-data/) (accessed 21 Oct 2026)

Disclaimer: This content is for educational purposes only and does not constitute financial, tax, or legal advice. Digital assets are volatile and you can lose all of the money you invest. Past performance does not guarantee future results. Wealtii is not registered with or authorised by any financial regulator.

## Further reading from official sources

- [CFTC: Digital assets and customer advisories](https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/CustomerAdvisories)
- [BIS: Cryptoassets and decentralised finance](https://www.bis.org/topics/fintech/crypto.htm)

[Zayd Ahmed](https://wealtii.com/editorial-policy#zayd-ahmed)

Founder & CEO, Wealtii

Computer Science Engineer | 5+ Years in DeFi & Digital Assets