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Why is Bitcoin Moving in Tandem with Equities?
In its early years, bitcoin had a reputation of being a portfolio diversifier relative to equities and sometimes referenced as digital gold or even an inflation hedge. However, since 2020, bitcoin has evolved from having no meaningful relationship with equities to a largely positive correlation as noted by both a static correlation matrix and rolling correlations. The closer ties come amid growing adoption of the cryptocurrency by institutions and retail traders alike. This study explored the relationship between bitcoin (XBTUSD) and equities, represented by the S&P 500 Index (SPX) and the Nasdaq-100 Index (NDX), ... (full story)
