Correlation between Bitcoin and stock market; BTC could plunge

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High correlation between Bitcoin and stock market might prove costly for the benchmark cryptocurrency due to the uncertainty around the U.S. presidential election.
The period leading to the U.S. elections is volatile for the traditional markets. According to Weiss Ratings, an analytics company, Bitcoin will experience high volatility due to its correlation with the stock market.
The company tweeted that the equities market has a lot of risks at the moment and it will transfer all that volatility to Bitcoin.
The stock market and Bitcoin may remain volatile until the election is over and they will adjust accordingly and finally stabilize after that,  Ethereum World News reported.
Bitcoin’s correlation with the stock market has been observed ever since the March 2020 crash. With September being a weak month for the S&P 500, the same pattern was seen in Bitcoin. It fell from $12,000 on Sept. 1 to $ 10,145 on Sept. 3.
Some analysts argued that while Bitcoin is highly correlated with traditional equities, it will not be the case forever. Billionaire hedge fund investor Michael Novogratz said a perfect illustration for this is that if the Nasdaq dropped 5% on a given day, Bitcoin would fall lower, not higher.
Another asset with a high correlation with Bitcoin is gold. Both the benchmark cryptocurrency and the gold’s value are being driven by the “store of value” narrative. That means people turn to both assets during times of economic uncertainty and inflation because they want to keep their values more than the dollar and even stocks.
On Sep. 20, the 60-day correlation between the two assets reached 0.5, a positive correlation which first started in July. This correlation led Bloomberg to say that Bitcoin would keep appreciating for the same factors that had helped gold achieve its current price. These factors — limited supply and store of value — will persist especially during this period of unprecedented quantitative easing, researcher Mike McGlone said.

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