Bitcoin isn’t just a tech stock on steroids. What really moves it.
December 8, 2025
About the author: Brian Schreiner is the founder and chief investment officer of Alpha Rock Investments, a boutique investment management firm.
Since the launch of spot Bitcoin ETFs in early 2024, investors have been haunted by a persistent narrative: “Bitcoin is just a tech stock on steroids.”
The common view is that when the stock market sneezes, Bitcoin catches a cold. As soon as liquidity dries up, crypto goes into free fall. It is a convenient theory for Bitcoin skeptics. But a closer look at the data reveals what many investors are missing: Bitcoin hasn’t been highly correlated with stocks.
Generally, a high correlation of +0.7 to +1.0 means that two assets move closely together or in lockstep. Moderate correlations of +0.3 to +0.7 mean that a relationship exists, but the assets often diverge. Low correlations of 0.0 to +0.3 mean that the assets don’t move together very often and, at the lower end, their movements are entirely independent.
To understand the true relationship between Bitcoin and stocks, my firm looked at the correlation coefficients of the Bitwise Bitcoin ETF to the S&P 500 SPY ETF and BITB to Invesco QQQ Trust ETF. Since the launch of the BITB last year, its average correlation with the SPY and QQQ has sat squarely at the lower-end of the moderate range: 0.38 and 0.39, respectively.
So while Bitcoin and the stock market are influenced by some of the same market forces, they are by no means tethered to one another.
They both have unique drivers. Generally speaking, Bitcoin halving—the programmed four-year reduction in new coin supply—doesn’t impact the stock market. Bitcoin adoption rates, sovereign purchases, corporate treasury purchases, and government regulatory action don’t affect stock prices either. Crypto-specific events like network improvements, technology upgrades, and issues with exchanges, such as the collapse of FTX, also strongly influence Bitcoin without affecting equities. Risks that quantum computing may pose to blockchains could influence the entire cryptocurrency market, but shouldn’t change stock prices.
Of course, we could also create a long list of factors that would impact stock prices but have little or no effect on the price of Bitcoin. There are many days, weeks, months and longer periods where stocks may be flat or down while Bitcoin is up, and vice versa.
Modern portfolio theory tells us this is a good thing for diversifying portfolios. Adding an asset with positive expected returns and low-to-moderate correlation can improve a portfolio’s overall risk-adjusted returns. If Bitcoin had a high correlation to stocks, adding it to a stock portfolio would offer little diversification benefit beyond simply adding volatility. But with a correlation below 0.40, the story changes.
It is important to note that during periods of extreme market panic, correlations among risk assets tend to spike. It is prudent to expect the correlation of Bitcoin to stocks to be high during such periods. So although Bitcoin acts as a good diversifier in most market conditions, it probably isn’t the best hedge to protect your portfolio when stock prices tank. History shows that in such panics there are very few true havens beyond cash and short term bonds. Those are the only assets where correlations with stocks have remained low.
But asset correlations aren’t static; they change over time. And every panic is unique. It is possible that in the future, assets like commodities, gold, bitcoin will act as a haven from equities. As the Bitcoin adoption rates increase and the network matures, I expect its correlation to stocks to continue to moderate. For my clients, that modest correlation is a feature, not a bug.
Guest commentaries like this one are written by authors outside the Barron’s newsroom. They reflect the perspective and opinions of the authors. Submit feedback and commentary pitches to ideas@barrons.com.
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