Fidelity’s director of global macro, Jurrien Timmer, reported that Bitcoin’s correlation with the S&P 500 index rose sharply last week. A basket of stocks that excluded artificial intelligence (AI) names moved from a 10% correlation with the S&P 500 at the start of the week to 40% by the end.
Market moves driving higher correlation
The S&P 500 fell 4.4% on Thursday, November 5, while the Nasdaq 100 dropped 6.4%. Timmer linked the declines to expectations that the newly elected Democratic Congress would impose tighter regulations on AI. He explained that when markets experience rapid, steep declines, asset correlations tend to converge.
Impact on Bitcoin and other diversifiers
During the same period, Bitcoin fell 5.4% on Thursday, a steeper decline than the S&P 500, as the VIX volatility index rose sharply. Timmer’s chart, based on Bloomberg and Haver Analytics data, compared roughly 20 assets against the S&P 500 and long‑term Treasuries. While Bitcoin, gold and commodities remain part of his diversification list, the U.S. dollar and the Bloomberg Commodity Index maintained near‑zero correlation with the S&P 500.
Historical data shows Bitcoin has sometimes behaved more like gold than equities; for example, Grayscale research indicated a 90‑day Nasdaq 100 correlation of about 33%, down from over 60% earlier in the year.
Broader implications
The recent selloff, driven by concerns over AI regulation, appears to have extended to assets with limited direct AI exposure, including Bitcoin and real‑estate investment trusts (REITs). The rise in correlation suggests that Bitcoin’s role as a diversifier may be reduced during periods of heightened market stress.
