How bitcoin’s moves show that the stock market is actually fueled by vibes
Bitcoin has been strongly correlated with the S&P 500; the low-volatility stocks within the S&P 500 have not.
Bitcoin is behaving more like the S&P 500 than the boring, safer stocks within the S&P 500 are.
The 21-session correlation between the daily change in the iShares Bitcoin Trust and the SPDR S&P 500 ETF recently got above 0.75, a level not seen since early April, when both were cratering on the announcement of reciprocal tariffs. Meanwhile, the 21-session correlation between SPY and the Invesco S&P 500 Low Volatility ETF, which holds the stocks that tend not to move as much, has collapsed. It’s gone negative, but could reasonably just be described as simply uncorrelated.
These correlations hint at what’s been a key driver for the benchmark US index: the ebbs and flows of speculative appetite. (I’m operating under the assumption that changes in sentiment, willingness to take risk, and ride momentum are the proximate causes of why bitcoin goes up and down.)
I have received more than a bit of pushback across social media recently for suggesting that bitcoin is behaving like a leveraged, low-fundamentals tech stock. I’m happy to correct the record — but only to change the chain of causality here.
That is, stocks are behaving like a de-levered version of bitcoin.
It seems fairly clear at this juncture that rollovers in bitcoin and other speculative pockets of the market in October were the bleeding edge of the retreat from risk that’s gone on to infect even the AI megacap leaders as of late.
