The cryptocurrency market has recently continued to attract the attention of investors as Bitcoin (BTC) and Ethereum (ETH) – the two largest cryptocurrencies in the world – show distinctly different levels of correlation with traditional assets such as stock indices and the US dollar (USD).

Data from the blockchain analytics company Sentora (formerly IntoTheBlock) recently provided a comprehensive view of the relationship between BTC, ETH, and traditional financial markets through a Correlation Matrix. This tool helps measure the extent to which two assets move together – in the same or opposite direction – over a certain period.

Bitcoin: Strongly Attached to the Stock Market

According to data from Sentora, Bitcoin has a very high correlation with major stock indices, especially Germany's DAX index with a correlation of up to 0.85 – meaning BTC and DAX almost move together. In addition, Bitcoin also has a strong correlation with major US indices:

  • Russell 2000: 0.70

  • S&P 500: 0.68

  • Dow Jones Industrial Average: 0.69

This indicates that BTC's current price behavior is heavily influenced by fluctuations in traditional financial markets, especially in the context of the global economy being affected by interest rate policies, inflation, and geopolitical factors.

Additionally, Bitcoin also shows a negative correlation with the USD Index (DXY) and the Market Volatility Index (VIX) – meaning BTC tends to rise when the USD and market anxiety levels decrease. This is a sign that Bitcoin is somewhat playing the role of a safe-haven asset in the context of a weakening USD or increasing instability.

Ethereum: Going Its Own Way

In stark contrast to Bitcoin, Ethereum is exhibiting a high level of independence from traditional assets. The correlation of ETH with major indices such as DAX, S&P 500, Dow Jones, or DXY is very close to 0, meaning there is almost no clear relationship between these assets.

Specifically, the correlation between ETH and DAX is only at 0.46, while with US indices and DXY, the correlation is even close to 0, reflecting Ethereum's high autonomy at this point in time.

This may stem from the differences in the structure and ecosystem of Ethereum compared to Bitcoin. While BTC is gradually being viewed as a macro financial tool, influenced by global market factors, Ethereum is positioned as a core technology platform for DeFi, NFT, and decentralized applications, which are less dependent on traditional economic indicators.

Short-Term Outlook: BTC Could Benefit from a Weakening USD

Sentora notes that in the short term, if the USD continues to weaken due to geopolitical tensions or monetary policy, this could be an opportunity for Bitcoin to continue rising in value thanks to its role as an alternative safe-haven asset. This shift is further reinforced as BTC has clearly shown an inverse relationship with the DXY index.

Conversely, Ethereum may continue to operate according to distinct factors, not heavily influenced by macro developments. This is a significant advantage, especially in the context of the global financial market entering a period of instability, where independent assets may become a safe haven for investors.

Conclusion

The divergence in the correlation levels between Bitcoin and Ethereum with traditional assets reflects the two distinct paths of the two largest cryptocurrencies in the market.

Bitcoin is currently functioning as a macro financial asset, closely tied to the stock market and the USD. Meanwhile, Ethereum shows independence and follows its own development path, linked with decentralized infrastructure technology and innovation.

This may create different investment strategies for each group of investors, depending on their risk appetite, investment goals, and expectations for the financial market in the near future.