Over the past decade, Bitcoin, as an emerging digital asset, has gradually evolved from a marginal investment option to an important part of the global financial market. As its market influence continues to grow, many investors have begun to pay attention to the relationship between Bitcoin and traditional assets, especially traditional investment tools such as stocks, bonds, and real estate. Data shows that the correlation between Bitcoin and traditional assets is getting stronger and stronger, and this phenomenon has triggered widespread discussion and thinking. This article will delve into the reasons behind this trend, its impact, and its implications for future investment strategies.

First of all, we need to make it clear that Bitcoin, as a decentralized digital currency, is essentially built on blockchain technology. This transparent and tamper-proof feature enables Bitcoin to transfer value globally without being restricted by the traditional financial system. Nevertheless, as more and more institutional investors enter this market, Bitcoin's price volatility has gradually decreased, and its correlation with traditional assets has also increased. According to the latest market research, many financial institutions have found that the correlation coefficient between Bitcoin and the S&P 500 index has risen to 0.6, which means that when the market fluctuates, the relationship between Bitcoin's performance and the traditional stock market becomes closer.

The reason behind this phenomenon can first be attributed to changes in market sentiment. When faced with uncertainty, investors tend to seek new safe-haven assets. Against the backdrop of economic fluctuations, geopolitical tensions or rising inflation, Bitcoin is seen as a kind of "digital gold", and many investors have begun to include it in their portfolios to hedge against potential risks. This trend has not only driven demand for Bitcoin, but also gradually deepened its correlation with traditional assets.

In addition, the influx of institutional investors is also a factor that cannot be ignored. In the past few years, many large companies, including Tesla and MicroStrategy, have included Bitcoin as part of their balance sheets. The actions of these companies not only brought new capital inflows to Bitcoin, but also made its position in the investment market more solid. As more and more institutional investors get involved, Bitcoin's price volatility begins to decrease, and its correlation with traditional assets also increases. This phenomenon, to a certain extent, reflects the market's increased recognition of Bitcoin, and investors are more optimistic about its future potential.

In addition to the influence of market sentiment and institutional investors, macroeconomic factors also play an important role in driving the correlation between Bitcoin and traditional assets. In recent years, central banks around the world have adopted loose monetary policies in response to economic recession and inflation. The implementation of this policy has led to a large amount of liquidity injected into the market and a general rise in asset prices. In this context, as an asset with a limited supply, the price of Bitcoin has also continued to rise, further deepening its correlation with traditional assets.

From an investor's perspective, understanding the correlation between Bitcoin and traditional assets is essential to building an effective investment portfolio. Traditional investment theory generally believes that low correlation between assets helps reduce overall investment risk. However, as the correlation between Bitcoin and traditional assets gradually increases, investors need to re-examine their investment strategies. When building a diversified investment portfolio, simply relying on the low correlation of traditional assets may no longer be applicable, and investors need to consider the role of Bitcoin in the portfolio more flexibly.

For example, an investor allocates 30% stocks, 30% bonds and 40% Bitcoin in his portfolio. With this allocation, investors can not only benefit from the growth of the stock market, but also use the safe-haven characteristics of Bitcoin to offset the risks brought by market volatility. This strategy is particularly important in the current market environment, because although the price volatility of Bitcoin has decreased compared with the past, it still has huge upside potential.

Of course, as the correlation between Bitcoin and traditional assets increases, investors are also facing new challenges. The regulatory policies of the Bitcoin market are not yet perfect, and the price volatility is still large, which brings considerable risks to investors. In addition, changes in the sentiment of market participants may also have a significant impact on the price of Bitcoin. In this case, investors need to remain vigilant and adjust their investment strategies in time to cope with market changes.

In future investments, the relationship between Bitcoin and traditional assets will continue to evolve. As financial technology continues to develop, more and more investment tools and platforms will emerge to promote the integration of Bitcoin and traditional assets. For example, many financial institutions have begun to offer Bitcoin ETFs (Exchange Traded Funds), making it easier for investors to invest in Bitcoin. This trend not only brings more liquidity to Bitcoin, but also makes its relationship with traditional assets closer.

In addition, as the global awareness of digital currency continues to increase, more and more countries are beginning to explore the issuance and application of digital currency. This process will further promote the popularity of Bitcoin and make its position in the investment market more solid. In the future, as digital currency gradually matures, the correlation between Bitcoin and traditional assets may further increase. Investors need to grasp this trend to formulate more flexible investment strategies.

In general, the correlation between Bitcoin and traditional assets has gradually increased, reflecting the changes in the market environment and the change in investor mentality. In this context, investors need to re-examine their investment portfolios and flexibly adjust their strategies to adapt to the changing market. As an emerging asset, although Bitcoin still faces many challenges, its unique value and potential make it indispensable for future investment. As many investors have said, future investment will no longer rely solely on traditional assets, but will require the flexible use of various investment tools in a changing market environment to achieve better returns on investment.

In this era full of opportunities and challenges, investors need to not only pay attention to market dynamics, but also have a deep understanding of the relationship between Bitcoin and traditional assets, so as to find an investment path that suits them in a complex financial environment. As time goes by, Bitcoin will continue to play an important role in the global financial market, and how to grasp this trend will be a topic that every investor must face.

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

While June has recorded more encouraging past times, data indicators such as on-chain data, spot and derivatives trading volumes are hitting lows. Realized volatility took another sharp dive in mid-June and fell below market expectations near the end of June, which also showed a downward trend. Futures markets showed signs of fatigue as the signal to break through $10,000 failed. Average daily trading volume has also been trending significantly downward since April.
Source: Skew
Since Black Thursday in March, futures market open interest has recovered but has not reached previous highs.
Source: Skew
Additionally, Bitcoin is seen moving in sync with traditional financial markets as its correlation with the S&P 500 hits an all-time high. As of last Friday, the realized 1-year correlation between Bitcoin and the S&P 500 reached 0.370, up from 0.06 in January.
Source: Coinmetrics
If we take a closer look at the short-term correlation between Bitcoin and stock indices, we find that as market expectations and speculation levels rise, the correlation becomes more significant. According to Skew data, the one-month correlation peaked on July 8, reaching an all-time high of 0.788.
Source: Skew
Historically, BTC has had a low correlation with traditional asset classes. However, since the liquidity crunch in March and the subsequent expansionary monetary policy of the Federal Reserve, all asset classes have been moving in the same direction.
Bitcoin’s correlation with gold remains relatively stable.