Over the last three weeks, the correlation between bitcoin (BTC) and the SP 500 has been declining. As of February 17, the correlation dropped to zero, meaning BTC completely decoupled from the leading stock market index.

According to data analyzed by market intelligence firm IntoTheBlock, the decorrelation between BTC and the SP 500 could be a bullish signal because BTC soared past $100,000 after the last time the market saw such a low correlation. This was in early November, shortly after the United States presidential elections.

Bitcoin Decorrelates From SP 500

Bitcoin trading independently of the stock market suggests that there is a shift in market dynamics affecting the cryptocurrency. At the time of writing, BTC hovered around $97,500, still within the $91,000-$102,000 range, which it had consolidated in the past few weeks.

On the other hand, the SP 500 recorded a second consecutive all-time high on Wednesday, climbing 0.2% to 6,140.88. Other major stock indexes like the Dow Jones and Nasdaq Composite also closed slightly higher, hovering less than 1% from unprecedented levels.

Bitcoin’s recent decorrelation from the stock market became increasingly evident in late January after the Federal Open Market Committee (FOMC) announced that interest rates would remain unchanged at 4.25%-4.50%. At the time, BTC showed no significant reaction to the news; however, the stock market and traditional equities experienced increased volatility.

CryptoPotato reported that the reaction from both the traditional finance and crypto industries suggested that digital assets were evolving beyond the narrative of being just “high-leverage tech stocks.” It also meant that cryptocurrencies were becoming more independent from traditional assets. The development has persisted in the last few weeks, with bitcoin’s correlation with the SP 500 now becoming non-existent.

A Bullish Sign?

Market analysts have discovered that most major crypto bull runs have occurred during times when BTC has recorded minimal reliance on global equity markets. This substantiates IntoTheBlock’s speculation that bitcoin’s decorrelation from the SP 500 could be a bullish sign and that a major rally for the leading cryptocurrency could be on the horizon.

Regardless, analysts at the crypto exchange Bitfinex insist that BTC is still vulnerable to macro developments and is currently behaving more like a risk-on asset than a store of value.