While some claim that cryptocurrency and bitcoin are “uncorrelated assets,” meaning that they don’t follow the direction of traditional markets, recent data indicates that the latest U.S. Federal Reserve interest rate cuts have made crypto move in tandem with the stock market.

According to data collected by Bloomberg, the level of correlation between the 100 largest digital assets and the S&P500 index during the last 40 days has reached 0.67, registering almost all-time high levels. This means that the same macroeconomic variables are driving both at this time.

The number is the second-largest correlation registered in history between these two markets, only surpassed by a 0.72 level registered during Q2 2022. A 1 in this case means a total correlation, while a -1 would indicate that the assets are moving in opposite ways.

After the Federal Reserve cut interest rates last week, all assets have been rising, with U.S. stocks hitting all-time highs, and gold rising in the same way. Cryptocurrencies have also benefited from the Fed’s decision, with bitcoin surpassing the $64,000 mark.

Caroline Mauron, a co-founder of Orbit Markets, a liquidity provider for cryptocurrency markets, assessed that this correlation would be able to continue as long as the Federal Reserve keeps cutting interest rates as expected.

She stated:

Macro factors are driving crypto prices currently, and this should continue throughout the Fed’s easing cycle, unless we see a crypto-specific black swan event.

In July, IDX Advisors CIO Ben McMillan had predicted that this correlation, which was hitting 0.6 at that moment, was “here to stay.” “We’re not going to go back to the days of bitcoin being zero or even negatively correlated to risk assets. It’s something to factor in when you think about it within your portfolios,” he stressed.