Bitcoin-S&P 500 correlation hits 10-year low, but daily returns still move together

Bitcoin’s correlation with the S&P 500 has fallen to its lowest level since 2015 under one metric, although the two assets still showed synchronization in short-term daily returns, according to a Bitwise report. Based on 260-day log-level prices, the correlation between Bitcoin and the S&P 500 dropped to -0.62. By contrast, the 260-day correlation based on daily returns stood at +0.40, indicating their medium- to long-term price paths diverged while their day-to-day gains and losses still moved in the same direction. The report also showed mixed results depending on the time frame. With a 5% Bitcoin allocation in a portfolio, annualized volatility rose from 12.68% to 13.01% and maximum drawdown widened from 9.10% to 9.98% over 260 days, while both measures declined over a longer 500-day period. The analysis suggests it is difficult to conclude from correlation metrics alone whether Bitcoin can serve as a full risk hedge during sharp daily stock-market declines.