Bitcoin Correlation with US Stock Markets Reaches 2-Year High, What Does This Mean for BTC?

The correlation between Bitcoin and Wall Street has been increasing over the past few months and reached a multi-year high earlier this week.

This comes at an intriguing time as some of the largest and most important U.S. stock indexes hit new all-time highs this week.

BTC-Wall Street correction increases

Last week’s Fed interest rate cut didn’t have a positive impact on crypto alone, as Wall Street also headed north. Additionally, US macroeconomic data on Friday showed inflation slowed to 2.2% compared to August last year. This comes from the Personal Consumption Expenditure Price Index, which some consider a more accurate indicator of inflation for individuals.

The Dow Jones Industrial Average immediately reacted by rising from 41,921 to 42,616 to record a new all-time high. Despite a slight decline at the end of the session, the Dow Jones was still slightly in the green.

The S&P 500’s performance was similar, as it rose from 5,722 to over 5,760 to paint its own new ATH before correcting to 5,738 at the closing bell.

The Nasdaq Composite failed to surpass its July marked ATH and even ended the day with a minor retracement.

At the same time, the price of BTC surpassed $66,500 on Friday for the first time in two months. According to data from IntoTheBlock, these developments have increased the positive correlation between Wall Street and Bitcoin, pushing the indicator to its highest level in two years.

$BTC‘s correlation with US stocks reached a two-year high this week, a level that was only exceeded in the second quarter of 2022. pic.twitter.com/in6YRZq2Iw

– Intotheblock (@intotheblock) September 27, 2024

When will there be a new BTC ATH?

CryptoPotato recently reported that bitcoin’s correlation with gold has also increased to a multi-month high. The price of the yellow metal has also seen a sharp rise in 2024, frequently reaching new highs. The latest was on Thursday, at just under $2,690/ounce.

As such, the logical question arises: when will BTC surpass its March all-time high of $73,800? With such a high correlation to assets that have done just that in the span of a week, BTC remains over 10% of its own.

Historically, the fourth quarter has been mostly positive for the largest cryptocurrency, with an average return of around 90% over the past decade. Additionally, October and November are the two most bullish months for BTC, which, coupled with the aforementioned data, could mean that a new all-time high is just around the corner.