March 2020 - Fed Rate Cut and Initial Impact

1. S&P 500:

- In March 2020, the S&P 500 underwent a significant correction as the COVID-19 crisis triggered a massive selloff in equity markets.

- In early March 2020, the index was down about 34% from its February 2020 highs.

- After the Fed rate cut and the implementation of fiscal and monetary stimulus, the S&P 500 gradually recovered, hitting new highs during the year, ending 2020 on a high.

2. Gold:

- Gold was considered a safe haven, similar to Bitcoin, and in March 2020 had an initial slight decline as investors liquidated various assets to cover losses.

- However, gold quickly recovered and started to rise significantly after interest rate cuts and massive liquidity injections from the Fed. As economic uncertainty increased, the price of gold reached an all-time high in August 2020, reaching over $2,070 per ounce.

3. Bitcoin:

- Bitcoin, like other assets, suffered a major fall at the start of the COVID-19 crisis, hitting a low of around $3,800 in March 2020.

- After the Fed rate cut and the introduction of stimulus, Bitcoin started an accelerated growth, partially correlated with the stock markets and gold, but with higher volatility. At the end of 2020, Bitcoin reached almost $30,000, experiencing a significant increase.

Long Term Correlation:

- The S&P 500 and Bitcoin have shown moderate correlation in the post-rate cut period, both supported by economic stimulus and investor risk appetite. When liquidity is high and rates are low, stock markets and speculative assets such as Bitcoin tend to appreciate.

- Gold had a negative or very weak correlation with the S&P 500 and Bitcoin. While gold has risen as a hedge against economic uncertainties and inflation, Bitcoin has been seen by some investors as a digital alternative to gold, offering a weak correlation between the two.

Performance Comparison (2020):

- S&P 500: From the March low, the S&P 500 is up about 68% through the end of 2020.

- Gold: From the March 2020 low, gold is up about 40% through August, ending the year with a total gain of about 25%.