Analysis unveils the strongest correlations with the world's largest cryptocurrency
According to a Cointelegraph report, the most correlated assets with Bitcoin are crypto-specific stocks, silver, and growth funds, according to a recent analysis spanning from October 2019 to October 2022. Investors seeking to understand the cryptocurrency's impact on traditional financial markets and sectors can benefit from this assessment of the assets that closely mirror Bitcoin's performance.
The primary assets showing a strong correlation with Bitcoin are companies heavily involved in cryptocurrencies, such as MicroStrategy (MSTR), Coinbase (COIN), and Riot Blockchain (RIOT). The high correlation is evident in the 90-day correlation coefficients for BTC/MSTR, BTC/COIN, and BTC/RIOT, remaining consistently near 1 for several months.
In addition, the analysis revealed a notable correlation between silver and Bitcoin during the observed timeframe, reporting a correlation coefficient of 0.26. Market experts attribute this correlation to silver's greater volatility compared to gold, which had a significantly lower correlation coefficient of 0.15.
Lastly, the correlation between growth funds, specifically small-cap growth funds, and Bitcoin, has been strong. The correlation coefficient during the period stood at 0.41, compared to a 0.35 coefficient for small-cap value funds and Bitcoin.
Investors are reminded that correlations may change rapidly due to fluctuations in Bitcoin's price and should account for these variations when assessing asset relationships.