The chart you shared shows the correlation between Bitcoin (in orange), Gold (in yellow), and the S&P 500 index (U.S. equities) over a trailing 6-month period.

Explanation:

1. Correlation: This measures how two assets move in relation to each other. If two assets have a correlation of 1, they move together perfectly. A correlation of -1 means they move in opposite directions, while 0 means there is no relationship.

2. Low Correlation: The chart demonstrates that Bitcoin and Gold have a low historical correlation with U.S. equities (the S&P 500). For example, the average correlation for Bitcoin is 0.2, and for Gold, it’s 0.1. This means that Bitcoin and Gold move somewhat independently of the stock market.

3. Periods of Dislocation: The term “dislocation” refers to times when Bitcoin’s correlation with equities either increases or decreases sharply. You can see this in the fluctuations on the chart where the correlation sometimes spikes up or down, but overall remains low over time.

Key Takeaway:

Bitcoin, much like Gold, does not consistently follow the movements of the U.S. stock market. It tends to behave independently, which is why it’s often seen as a potential hedge or alternative investment.

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