The Correlation Between Bitcoin and Stocks is Reshaping!

Jag Kooner, Head of Derivatives at Bitfinex, evaluated the correlation between Bitcoin (BTC) and stocks.

Jag Kooner recently included the correlation between Bitcoin and US-based stocks in his statement to The Block.

Stating that historically, this correlation is full of ebb and flow, the experienced name stated that Bitcoin is more correlated with stocks during periods of economic stress.

On the other hand, he emphasized that Bitcoin diverges from stocks when the environment calms down and positive situations such as money printing are seen. In the current situation, he implied that macroeconomic stress has begun to ease and the correlation in question has been reshaped:

During economic stress, Bitcoin often mirrors stock market trends and correlation increases as investors liquidate assets. In an incentive-driven environment with lower rates, Bitcoin could benefit alongside stocks due to increased liquidity.

Stating that Bitcoin is also seen as a hedge against inflation, Kooner said that if the European Central Bank's (ECB) interest rate cut raises inflation expectations, Bitcoin could receive more investment:

If Bitcoin continues to be viewed as a risk asset, it could follow stocks by benefiting from the same liquidity inflows.