Bitcoin has been forming a striking correlation to the S&P 500 and the rest of the stock market throughout the past few months.

This correlation has only grown in recent weeks, and today’s slide in the equities market has led the benchmark cryptocurrency down to a crucial support level

Analysts are now pointing to this correlation as being a guiding light for BTC’s mid-term outlook.

This may not bode well for the crypto, as one billionaire investor is now warning investors against jumping into the stock market.

He notes that the stock market is a forward indicator that may not accurately reflect the state of the economy for another year.

This means that there could be some severe turbulence ahead, and this could cause Bitcoin to delay its next uptrend further.

Bitcoin’s Correlation to the S&P 500 Remains Strong

Ever since the mid-March meltdown seen by both Bitcoin and the traditional markets, the cryptocurrency has been closely tracking the price action seen by the S&P 500 and other benchmark indices.

This has given rise to the crypto’s lack of directionality seen throughout the past few months, as investors in the traditional markets are largely awaiting more data regarding the economic impacts of the pandemic.

Today, however, some slight turbulence within the market has also caused Bitcoin’s price to slide.

At the time of writing, Bitcoin is trading down over 1% at its current price of $9,100. This is slightly below its crucial support at $9,200 that bulls had been defending throughout the past week.

It is possible that this correlation will continue providing Bitcoin with a headwind that hampers its growth.

While looking towards the below data from the analytics platform Skew, the realized one-month correlation between Bitcoin and the S&P 500 just hit a yearly high.

As seen in the above chart, this correlation now sits at 56.8%.

Why This Correlation May Not Bode Well for BTC in the Near-Term

Billionaire investor David Rubenstein explained in a recent interview with Yahoo Finance that jumping into the stock market now with anticipations of being profitable is a “fool’s errand.”

“It’s a fool’s errand to go into the market now thinking that it’s a bottom and you’re going to go up from here… I think there’s going to be a lot of ups and downs.”

He also added that the stock market is a forward indicator that is attempting to price in the future state of the economy,

That being said, this means that 2021 could be a rough year for the markets – including Bitcoin, should its correlation persist.

“The stock market is a forward indicator. It’s indicating maybe a year from now that some of these numbers will be justified. But right now, I do think that there is going to be a lot of gyrations between now and a year from now.”

Featured image from Shutterstock.

Pricing data from TradingView.