Recently, I collected the price data of Bitcoin, SP500, gold, CSI 300, and Hang Seng Index over the past fifteen years to study the dynamic correlations of their logarithmic returns. The model used is GC-DCC with a rolling window of 60 days. There are a few interesting results. The main changes occurred in the five years following the outbreak of the pandemic. (The chart shows the dynamic correlation curves of Bitcoin with various assets.)

1) The correlation between BTC and the S&P 500 shows significant phase changes, especially after entering 2020, where the correlation has notably increased, remaining above 0 overall in the past 5 years. This aligns with the signals and timing of traditional institutional entry. Combined with the U.S. federal funds rate curve (see below), their correlation spikes during interest rate cuts and declines during rate hikes. During rate cuts, liquidity is injected into the U.S. stock market and Bitcoin; during rate hikes, the U.S. stock market and Bitcoin exhibit independent trends.

The flow of liquidity between the US stock market and cryptocurrency is actually a very interesting topic, including the recent buzz around MicroStrategy and stablecoin trends, which could each warrant a detailed report. (Chart of the US Federal Funds Rate vs. the correlation curve between Bitcoin and the S&P 500)

2) The correlation between BTC and gold has fluctuated significantly after 2020 (rising to 0.6 and dropping to -0.4), mainly due to the increased geopolitical risks over the past five years, with gold repeatedly hitting new highs. By the way, I compared the correlation coefficient with the EPU index (Economic Policy Uncertainty Index) (see the chart below), and it is clear that each time the EPU rises above 200, the correlation between Bitcoin and gold is also at a high level. This indicates that Bitcoin still has safe-haven properties.

Chart Economic Policy Uncertainty Index EPU vs Bitcoin and Gold Dynamic Correlation

3) Compared to the S&P 500 and gold, the dynamic correlation of Bitcoin with the Shanghai Composite Index and the Hang Seng Index does not show significant phase changes, remaining around 0. It can only be said that the market control represented by the Shanghai and Hang Seng indices is still quite strong. Looking forward to Hong Kong's participation after 2026.

4) The three curves in the dynamic chart of the first image divide Bitcoin into three phases. The first phase is the peer-to-peer cash phase before 2014, which is the earliest positioning in the Bitcoin white paper. During this phase, the dark web emerged, using Bitcoin as the sole payment tool, until the later introduction of stablecoins and privacy coins, which gradually reduced Bitcoin's monetary payment attributes.

The second phase is from 2014 to 2020. Due to the rapid increase in Bitcoin prices, the digital gold attribute of Bitcoin was gradually accepted by the community, and the entire industry's infrastructure, applications, and financial strategies developed. Bitcoin also gradually entered the sight of traditional financial institutions. After 2020, the entry of traditional financial institutions and hoarding Bitcoin became the mainstream and even the only winning strategy.