Question #334 ·
What does a 0.87 correlation between Bitcoin and the S&P 500 imply for Bitcoin price movements?
- It implies Bitcoin price movements closely track equity markets, reflecting strong market interdependence. Right answer
- It implies Bitcoin price movements are entirely independent from stock markets and factors.
- It implies Bitcoin price movements mirror commodity markets due to an energy correlation.
Why is this the correct answer?
This is correct because a correlation of 0.87 means Bitcoin’s price often moves in the same direction as the S&P 500. For beginners, this means broader market news affecting stocks can also influence Bitcoin’s value due to their high correlation.