Uncovering the Correlation Between Bitcoin and Stock Markets

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By mid-November, the 30-day correlation coefficient between Bitcoin and global stocks dropped to -0.23, the lowest level since the start of the 2020 pandemic.

The long-term and more recent trends in Bitcoin and orange prices indicate that Bitcoin’s price gains simply reflect a measure of U.S. dollar inflation.

Of course, this year orange supply has greatly decreased. Therefore, even if the Fed slows down new dollar supply, orange, orange juice, and orange futures prices have risen.

For years, the correlation between Bitcoin and stock markets has been frequently discussed and monitored: But there’s another correlation!

Evaluation of Bitcoin’s Correlations

Forget the correlation between Bitcoin (BTC) and stocks. By mid-November, the 30-day correlation coefficient between Bitcoin and global stocks dropped to -0.23, the lowest level since the start of the 2020 pandemic.

By the end of 2020, Bitcoin’s annual correlation with stocks reached a record level. This shows that the world’s leading cryptocurrency is indeed a way to add diversity to a stock-weighted portfolio. However, Bitcoin has a significant correlation with a specific global commodity: oranges.

Here’s a juicy data: According to IMF data, the global average price of one pound of oranges was $3.13 in August. By October, orange prices soared to $3.84, a 22% increase.

Meanwhile, Bitcoin’s average daily closing price in August was $27,852. However, by October 31, Bitcoin’s closing price rose to $34,667, a 24% increase compared to August’s daily closing price.

Between January 2020 and August 2023, orange prices increased by 180%, while BTC rallied by 230%. Therefore, in the last three months, the correlation between Bitcoin and oranges has significantly increased. The long-term and more recent trends in BTC and orange prices indicate that Bitcoin’s price gains are simply a measure of U.S. dollar inflation.

Bitcoin Halving Intensifies Demand

Of course, orange supply has greatly decreased this year. Therefore, even if the Fed slows down new dollar supply, orange, orange juice, and orange futures prices have risen. The U.S. Department of Agriculture predicts that Florida will produce only 15.9 million boxes of oranges in 2023. This means a 70% decrease compared to the 2020-21 season. Production in Brazil and Mexico also fell this year due to warmer weather caused by El Nino.

However, this is a good example of the economy supporting the striking price gains in Bitcoin’s 15-year history. Currently, Bitcoin price markets on crypto exchanges are pricing in the four-year supply reduction that will occur next year – a halving of the four-year supply.