U.Today – Patterns have begun to emerge amid continued price volatility in the cryptocurrency market. There are signs of strong correlations between digital assets and traditional financial assets. In an article on X, Mike McGlone, senior commodities strategist for Bloomberg Intelligence, highlighted the correlations of some of these assets.
Strong positive correlation
McGlone noted that (BTC) and (DOGE) have a strong positive correlation of 0.68. This suggests that the price action of Bitcoin closely determines that of DOGE. In the broader market dynamics, both coins rise and fall together due to correlation.
McGlone’s analysis appears to be coming to fruition as Bitcoin and Dogecoin are experiencing downward price movement as of this writing. Interestingly, the price decline began within hours of each other, with Bitcoin falling first, only for DOGE to follow the same trajectory.
Data from CoinMarketCap shows that BTC is trading at $92,873.61, down 3.04% over the past 24 hours. DOGE recorded a slightly higher decline of 8.16% to $0.3214. Regardless of the percentage difference, both are in rapid decline from their start in January.
However, on rare occasions, DOGE has broken correlation with Bitcoin, as reported by U.Today.
Comparative analysis with traditional assets
McGlone further highlighted this correlation by comparing BTC with traditional assets like the S&P 500. This positive correlation of 0.32 with BTC indicates a modest relationship with the stock market. When the S&P 500 rises or falls, Bitcoin tends to follow in the same direction, but not strongly like the BTC-DOGE dynamic.
According to McGlone, gold and the US dollar index are at 0.15 and -0.14, respectively. This highlights the weak relationship between Bitcoin and gold. The negative correlation with the implies that BTC is moving in the opposite direction to the value of the dollar.
When Bitcoin strengthens, the dollar weakens, and vice versa. Overall, the strongest correlation is currently evident in the broader cryptocurrency market, where BTC and DOGE are on a downward trajectory.