Bitcoin and Ethereum can be risky assets amid the ongoing COVID-19 pandemic, the Russo-Ukrainian war, rising inflation rates, and other global events. In fact, in just a matter of days, even hours, prices have fluctuated wildly and investors are on high alert. However, the data seems to indicate that these are reasonably good assets for now.

The correlation between bitcoin and the stock market is collapsing

Noting that crypto has entered the “big league” of the financial industry, Messari acknowledged that investors can expect Bitcoin and Ether to correlate with movements in high-risk stocks. However, this does not appear to be the case when comparing BTC and Ether to the Russell 2000 Growth Index.

When the correlation of BTC, ETH and Russell 2000 growth was analyzed, the index was over 80% from late 2020 to early 2021. But since mid-2021, the correlation has dropped below 0.

However, in 2022, BTC correlation is above 20%, while ETH correlation is currently above 0%. The average correlation is about 35% and 30%, respectively.

4/ During $BTC & $ETH can be volatile, they don’t track the riskiest segments of the market as closely as most would assume.

Using the Russell 2000 Growth Index as a proxy for small cap stocks with minimal gains $BTC average about 35% correlation during $ETH averages around 30%. pic.twitter.com/E2vffBC4wG

– Messari (@MessariCrypto) February 27, 2022

Not only Messari believes that Bitcoin and Ethereum are ultimately less correlated than the traditional markets. In fact, co-founder Chris Burniske did explain that BTC and ETH are the “growing markets” of the crypto space.

At the moment the recovery process seems to be underway. Bitcoin traded around the $43,000 region, up 16% from last week. Meanwhile, ETH was changing hands above the $2,900 zone.

BTC price chart | Source: TradingView

ETH price chart | Source: TradingView

A real connection?

However, it may not be time for investors to breathe a sigh of relief just yet as Bitcoin’s correlation with the stock market is still strong. For example, the S&P500 futures is down more than 2% on FUD from the Russia-Ukraine war.

Santiment notes that if the war continues, this could be an important metric to keep an eye on.

???? Global equities start the week in the red again #SP500 Futures up more than -2% than #War concerns loom. #Bitcoin remained closely connected #Shares, as traders wait for a breakout sign. Pay close attention to this relationship. ???? https://t.co/06MTkomsnw pic.twitter.com/mVpiBp4Q0x

— Santiment (@santimentfeed) February 28, 2022

Contrasting indicators

That doesn’t mean, however, that traders are lying still waiting for peace to return. In fact, the data shows that the number of unique BTC in circulation hit a nine-month high.

Santiment also theorized that Bitcoin traders pursued very different strategies during the outbreak of the war.

According to Santiment, Bitcoin token circulation hit a 9-month high, showing how polarized traders have become by the war. This peak in circulation was similar in March 2020. pic.twitter.com/7RfAc95vBr

— Wu Blockchain (@WuBlockchain) February 27, 2022

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