👉 Background: We know Bitcoin is prone to some pretty big swings. We saw it go way up to US$69,000 last November, and now we're seeing it go way, way down.

👉 What happened: Bitcoin dipped under US$25,000 for the first time in 18 months. That takes Bitcoin's market cap down to US$800 billion from nearly US$3 trillion at its peak. There are a few things at play here: surging inflation, tighter monetary policy and the war in Ukraine.

👉 What else: It looks like Bitcoin's trajectory is following that of the S&P500 - AKA the benchmark of the 500 biggest companies in the US. We know that thanks to the correlation co-efficient.

What's the key learning?

💡The correlation co-efficient essentially measures the degree to which two different variables are connected. Like whether the movements on the S&P500 are connected to the movements in the bitcoin market.

💡When the correlation co-efficient is close to 1, it means that they are very closely correlated. When it's closer to 0, it means they're not correlated at all. Bitcoin has long been thought of as a pretty good hedge against global markets. But now, it looks like the correlation between bitcoin and global markets is a lot closer - more than ever before.

💡For many investors, this leads to even more uncertainty in the usefulness of crypto asses for diversifying a portfolio.

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