How intertwined is Bitcoin to major indices?

This is a question I had hoped would be answered after both the S&P 500 (along with all other major indexes) and BTC futures began a deep correction at the end of February due to the growing covid-19 pandemic. I was hoping that timing of a recovery in these markets would shed light upon how linked these two markets have become since institutional investors have begun to get their feet wet in the cryptocurrency markets. Which I believe is both good and bad for BTC’s future as a speculative asset, store of wealth, safe haven asset and continued rise of overall adoption.

In this study we are putting a daily BTC chart of CME futures above a daily chart of the Standard and Poor’s 500. What we have drawn in is vertical blue lines indicating roughly when these two markets came back in alignment. From there (December 5th) we used a swing ruler to measure both the price difference for both markets from their recent highs around mid-February down to the lows which for BTC came ten days earlier.

What we noticed is that indeed BTC has indeed come back into alignment, but has outpaced and outperformed over the major index. From the date of Feb. 19th   to the bottoms on the 13th and 23rd of March were Bitcoin lost almost 50% 0f its value and the S&P lost approximately 35% of its value. But if you look at how much has each market recovered of the losses from mid-Feb. to mid-March you can see that indeed BTC has so far recovered 75% of its losses brought on by the current pandemic. While the S&P 500 has only recovered up to 50% of its recent losses in the same time frame, beginning Feb. 19th to present day. Also while the S&P hit a top and started to correct on April 29th, BTC futures have continued to climb and in fact had their best day for 2020 on the 29th of April.

The area highlighted in red is the time frame when BTC was detached and not synchronized with the S&P. And although we are showing them come into alignment with one exception and that is BTC is leading the way in terms of hitting a bottom and how fast and far it was able to recover.

While the S&P 500 found resistance at the .618% retracement from mid-February prices to mid-march lows. BTC has found to the 78% retracement of the same time frame.  And While the S&P has traded down testing support at the 50% level (2,791) since hitting resistance five days ago BTC continues to test resistance at $9,151 for the last two sessions after piercing resistance on an intraday basis. So while BTC seems to be consolidating at current prices The S&P has been correcting.

All of this gives reason to make the assumption that Bitcoin is and has been somewhat in sync with the S&P for the entirety of 2020, But BTC is not only looking more bullish but candle size is normal for BTC while the S&P has not seen volatility of this magnitude really since 2018 which tells us Bitcoin is handling this situation quite nicely and although tied to sentiment of other markets its decentralized nature still allows more resilience in times of panic which are not over yet.