Bitcoin, often referred to as “digital gold” or now even as “digital capital” by Strategy’s Michael Saylor, has continued sparked debate about its role in financial markets.
Recent trends, highlighted in an extensive report from Coin Metrics, suggest that Bitcoin (BTC), the flagship cryptocurrency, may finally be decoupling from traditional assets like equities and gold, especially as correlations have fallen near zero.
In an extensive research report, Coin Metrics explores Bitcoin’s (BTC) behavior across different market conditions, its relationship with interest rates, and its evolving risk profile as of May 2025.
The U.S. Federal Reserve’s policies, particularly interest rate changes, significantly impact markets, including Bitcoin.
Over the past decade, we’ve seen shifts from zero-interest rates to aggressive hikes and recent cuts. Bitcoin’s correlation with interest rates is generally low, but patterns emerge during policy shifts:
- From 2010-2015, during zero-interest rates post-2008, Bitcoin saw high returns with neutral correlations, reflecting early growth.
- During 2015-2018, as rates rose, Bitcoin’s returns were volatile, but correlations stayed low, showing a disconnect from macro policy.
- The 2018-2022 period, marked by COVID-19 cuts, saw variable but positive returns, with correlations fluctuating widely.
- In 2022-2023, rapid rate hikes led to a strong negative correlation, with Bitcoin weakening under tighter conditions, exacerbated by events like the FTX collapse.
Since 2023, with recent rate cuts, Bitcoin’s performance has been neutral to positive, with correlations edging toward zero, suggesting a transitional phase.
Recent data indicates Bitcoin’s 90-day correlations with the S&P 500 and gold have fallen near zero, a rare occurrence typically seen during major market shocks, like the 2019 China ban on Bitcoin or the 2024 spot Bitcoin ETF approval.
Historically, such low correlations last 2-3 months and often precede moderately positive returns.
However, Bitcoin’s beta to the S&P 500 was high in 2024, amplifying gains and losses, though it seems to be declining in 2025, suggesting less dependence on equities.
Bitcoin’s realized volatility, once exceeding 80-100%, has declined since 2021, now stabilizing at 50-60%, aligning with technology stocks like NVIDIA.
This reduction likely reflects Bitcoin’s maturation and broader institutional adoption, though it remains a risk-on asset rather than a safe haven.
Bitcoin’s potential decoupling from traditional markets has been a focal point in financial discussions.
Given these developments, Coin Metrics and other researchers have provided a comprehensive analysis, drawing from recent data and historical trends, to explore Bitcoin’s behavior across market regimes, its correlations with equities and gold, and its evolving risk profile.
Over its 16-year history, Bitcoin has been labeled “digital gold,” a “store of value,” and a “risk-on asset.”
These labels reflect its perceived role as a hedge against inflation, a safe haven, or a speculative investment.
However, its actual behavior often deviates from these narratives, prompting questions about whether it is a unique asset class or merely a leveraged expression of existing risky assets.
The U.S. Federal Reserve’s influence on interest rates affects market liquidity and investor risk appetite, impacting Bitcoin.
To analyze this, it is useful to segment Bitcoin’s history into five key regimes based on the Federal Funds Rate (FFR):
- Accommodative + Zero Interest Rate Policy (2010-2015): Post-2008, zero rates drove Bitcoin’s early growth, with monthly returns uncorrelated to interest rate changes, reflecting its nascent stage.
- Accommodative + Hiking (2015-2018): As FFR approached 2%, Bitcoin’s returns were volatile, with correlations spiking in 2017 but generally remaining low, suggesting independence from macro policy.
- Accommodative + Cutting (2018-2022): COVID-19 stimulus and near-zero rates led to variable returns, with correlations swinging from -0.3 in 2019 to +0.59 in 2021, before settling near neutral.
- Restrictive + Hiking (2022-2023): The Fed’s fastest rate hikes, pushing FFR above 5%, showed the strongest negative correlation, with Bitcoin weakening amid risk-off sentiment and crypto shocks like FTX’s collapse.
- Restrictive + Cutting (2023-Current): With three rate cuts from elevated levels, Bitcoin’s performance has been neutral to positive, influenced by events like the U.S. presidential elections and trade wars. Correlations remain negative but edge toward zero, indicating a transitional phase.
This analysis indicates that while Bitcoin’s correlation with interest rates is generally low, shifts in monetary regimes, especially tightening cycles, significantly affect its behavior.
To assess decoupling, Coin Metrics examine Bitcoin’s 90-day correlations with the S&P 500 and gold.
Recent data, as of May 2025, shows these correlations have fallen near zero, a phenomenon typically seen during major market catalysts or shocks.
Historical low correlation periods, such as the 2019 China ban on Bitcoin and the 2024 spot Bitcoin ETF approval, lasted 2-3 months and often coincided with moderately positive returns.
This suggests Bitcoin may offer diversification benefits during such phases, desirable for risk-diversified portfolios.
However, Bitcoin’s relationship with equities is complex.
For much of 2024, its market beta to the S&P 500 was above 1, indicating high sensitivity to stock market movements.
In bullish, risk-on environments, investors with Bitcoin exposure saw higher upside compared to equities.
For example, in 2024, while the S&P 500 increased by 24%, Bitcoin surged 135% (Nasdaq).
This high beta aligns with Bitcoin’s reputation as a leveraged play on equities, amplifying both gains and losses.
As of early 2025, Bitcoin’s beta has started to decline, suggesting it is becoming less tethered to market movements, though it still trades like a risk-on asset rather than a safe haven like gold.
Market beta quantifies how Bitcoin’s returns move relative to a benchmark, scaled by market volatility.
A beta above 1, as seen in 2024, means Bitcoin’s returns increase by more than 1% for every 1% change in the S&P 500.
For instance, a beta of 1.5 implies a 1.5% return for a 1% market upswing.
Recent trends in 2025 show Bitcoin’s beta decreasing, indicating reduced dependence on equities, but it remains sensitive to market risks, particularly in bullish conditions.
Volatility is a core characteristic of Bitcoin, often cited as both a risk and a return driver.
Its realized volatility, measured over 180 days, has trended downward since 2021.
Early phases saw volatility exceeding 80-100%, driven by rapid price swings.
During COVID-19, volatility rose in tandem with equities, and crypto-specific shocks like Terra Luna and FTX’s collapse in 2021-2022 further spiked it.
However, by May 2025, volatility has stabilized at 50-60%, aligning with technology stocks like NVIDIA.
This decline suggests Bitcoin’s maturation, with a broader, more stable ownership base, including institutional investors, reducing short-term volatility.
Has Bitcoin decoupled from the market?
The evidence as of May 2025 leans toward yes, with correlations near zero suggesting a unique phase, likely driven by recent market catalysts.
However, this decoupling is not absolute (for now, at least); Bitcoin remains influenced by interest rates, market sentiment, and crypto-specific events.
Its declining volatility and lower beta indicate a maturing risk profile, potentially positioning it as a distinct asset class.
For investors, this potentially offers diversification opportunities, but caution is warranted given Bitcoin’s historical volatility and risk-on nature.