Does crypto move with the stock market?

Does crypto move with the stock market?

Crypto investors and tradfi observers often ask the same simple question: does crypto move with the stock market? This article answers that question directly, shows how the relationship has changed over time, summarizes empirical evidence and drivers, and highlights practical implications for portfolio construction and trading. You’ll also find up‑to‑date context about institutional flows and ETF developments as of Jan. 21–22, 2026.

Note: precise phrasing matters. When we ask "does crypto move with the stock market" we mean whether prices of representative crypto assets (commonly Bitcoin and major altcoins) co‑move with major equity indices (S&P 500, Nasdaq) in statistical or economic terms — correlation, causation and volatility spillovers.

As of Jan. 22, 2026, Bitcoin traded near $89,261 (24h volatility ~0.5%, market cap ~$1.79T, 24h volume ~$52.25B) and Ethereum near $2,956 (24h volatility ~0.8%, market cap ~$358.21B, 24h volume ~$33.00B), numbers that illustrate crypto’s large market scale and the liquidity that helps institutional participation. As of Jan. 21, 2026, Nasdaq filed with the U.S. SEC to remove certain options position and exercise limits on Bitcoin and Ethereum ETFs — a regulatory development with potential implications for cross‑market trading and correlation.

Short answer — a time‑varying, partial correlation

Short answer to "does crypto move with the stock market": sometimes. Cryptocurrencies often move with equities during broad risk‑on or risk‑off episodes, but the link is neither permanent nor uniform across assets or time. Correlation has tended to rise with greater institutional adoption, ETF availability, and derivatives liquidity, but crypto‑specific shocks (exchange failures, protocol events, regulatory actions) can and do cause episodic decoupling.

In plain terms: does crypto move with the stock market? Yes — particularly in stressed macro periods and as institutional involvement grows — but the relationship is conditional, asset‑specific, and changing.

Definitions and scope

Clear definitions help avoid confusion when asking "does crypto move with the stock market."

• Crypto: for this article, crypto refers primarily to liquid, market‑cap‑weighted tokens such as Bitcoin (BTC) and Ethereum (ETH), representative large‑cap altcoins, stablecoins (as a liquidity/shock absorber), and crypto derivatives and ETFs that give institutional exposure. Using BTC/ETH as proxies is common but imperfect: smaller altcoins can behave very differently.

• Stock market: this generally denotes broad U.S. equity benchmarks (S&P 500, Nasdaq Composite) and sector indices, as well as equity ETFs. When we talk about correlations with the "stock market" we usually mean correlations with these major indices or their ETFs.

• "Move together": technically this can mean several statistical concepts:

  • Correlation: contemporaneous linear co‑movement (Pearson or rank correlations), often measured as rolling/windowed correlation.
  • Cointegration: long‑run relationships where asset prices share a stable equilibrium.
  • Granger causality: whether past values of one series help predict another.
  • Volatility spillovers: whether volatility (not just returns) transmits across markets.

This article covers these notions and explains how measurement choices affect conclusions about whether crypto moves with the stock market.

Historical overview

Early period (pre‑2020)

In bitcoin’s early years and through much of the 2010s, crypto showed low or inconsistent correlation with equities. The market was dominated by retail traders, idiosyncratic narratives (use cases, developer activity, token launches), and episodic bubbles. Correlation estimates in many studies were small and unstable; crypto behaved more like an emerging, risky standalone asset than a component of broad cap‑weighted equity indexes.

2020 pandemic and the rise in correlation

The March 2020 COVID‑19 shock was a turning point. In the equity crash and sudden liquidity squeeze, both equities and crypto fell sharply together. Subsequent fiscal and monetary stimulus, plus a search for yield and risk appetite, pushed both assets higher. Rolling correlations between BTC/ETH and the S&P 500 rose through 2020–2022, leading many researchers to conclude that crypto had become more correlated with traditional risk assets in major macro episodes.

2022–2023 shocks and episodic decoupling

Crypto has also displayed independent behavior. Industry‑specific shocks (exchange collapses, major protocol issues, and the FTX collapse in late 2022) caused large crypto drawdowns that were not always mirrored by the broader stock market. Those episodes highlighted crypto’s unique vulnerabilities: custodial counterparty risk, leverage in crypto derivatives markets, and regulatory uncertainty. During such periods, crypto often moved idiosyncratically.

2024–2025 institutionalization and renewed links

Through 2024 and into 2025, increased institutional adoption—spot ETF approvals, growing institutional holdings, larger on‑chain custody flows, and deeper options/futures markets—restarted conversations about stronger cross‑market linkages. For example, as of Jan. 21, 2026, Nasdaq sought SEC approval to remove certain position and exercise limits on options for Bitcoin and Ethereum ETFs (impacting funds such as BlackRock’s IBIT and ETHA among others), a procedural change that could increase options trading and cross‑market strategies. Large institutional buys reported in early Jan. 2026 (BlackRock adding ~9,619 BTC and 46,851 ETH over consecutive days; Strategy acquiring tens of thousands of BTC) are concrete data points that bind crypto more closely to institutional portfolio flows and therefore to other risk assets.

Empirical evidence and studies

Academic and industry studies use a range of methods to test whether crypto moves with the stock market. Common approaches include:

• Rolling Pearson correlations between daily returns of BTC/ETH and equity indices.
• Autoregressive distributed lag (ARDL) and cointegration tests for long‑run relationships.
• Granger causality tests to detect predictive lead/lag relationships.
• Multivariate GARCH and volatility spillover models to test how shocks cross markets.
• Event studies around macro announcements and crypto‑specific shocks.

Findings are mixed but tend to converge on a few patterns:

• Correlations increased after 2020 relative to the 2010s, especially in times of global risk repricing.
• Many studies find only episodic or weak long‑run cointegration; crypto often does not share a stable long‑run equilibrium with equity indices.
• Volatility spillover research frequently shows that crypto can transmit volatility to other markets in stressed windows, although the effect size and direction vary by sample.
• Some papers find instances where crypto volatility Granger‑causes equity volatility or returns in shorter windows; others find the reverse or no effect, reinforcing the conditional nature of the link.

Overall, the literature supports the statement that crypto and stocks can move together but that the relationship is time‑varying and sample‑dependent.

Key drivers of correlation

Institutional adoption and portfolio integration

Institutional allocation changes — via spot ETFs, custodied funds, and corporate treasury purchases — increase the overlap between investor bases in crypto and equities. When funds use similar risk‑parity, volatility targeting, or multi‑asset strategies, crypto may move with equities as institutions rebalance across asset classes. The Jan. 2026 filings and reported purchases by major asset managers are examples of factors deepening this link.

Macro and monetary factors

Macroeconomic variables (interest rates, inflation expectations, liquidity injections) drive broad risk‑on/risk‑off cycles that affect many asset prices simultaneously. Lower real rates and ample liquidity have historically supported higher valuations across risk assets, sometimes producing positive co‑movement between crypto and stocks.

Market structure, liquidity and derivatives

As crypto derivatives markets (futures, options) deepen and become more accessible on regulated venues, price discovery can integrate across cash and derivatives and across asset classes. Position limits or exchange rules can impede large hedging strategies; Nasdaq’s Jan. 21, 2026 filing to remove options position/exercise limits for crypto ETFs is a structural change that could facilitate larger cross‑market option strategies and thus stronger co‑movement.

Investor composition and behavior

Retail investors often trade sentiment and event‑driven stories, while institutional investors are more likely to follow macroeconomic signals and systematic strategies. As institutions form a larger share of crypto holders, behavior patterns align more with other institutionally held assets.

Crypto‑specific events and fundamentals

Regulation, security incidents, exchange failures, protocol upgrades (e.g., major forks or EIPs), and token supply mechanics (Bitcoin halvings) remain powerful drivers of crypto returns that can break correlation with equities.

How correlation is measured — methods and limitations

Common measures and their caveats:

• Pearson correlation: simple and interpretable but sensitive to outliers and nonstationarity.
• Rolling/windowed correlations: show time variation but depend on window size; short windows are noisy, long windows can hide episodic co‑movement.
• Cointegration tests (Engle‑Granger, Johansen): check for long‑term equilibria but require stationarity of residuals; crypto’s nonstationary behavior complicates inference.
• Granger causality: tests predictive precedence, not true causation; results depend heavily on sampling frequency and lag selection.
• Multivariate GARCH and spillover indices: capture volatility transmission but require careful specification and sufficient data.

Limitations in practice:

• Short sample history for many crypto products (spot ETFs exist only recently), especially for studies focused on post‑ETF behavior.
• Using BTC or ETH as proxies ignores the heterogeneity of altcoins.
• Structural breaks (halvings, ETF approvals, exchange defaults) can bias estimates if not modeled.
• Differences in trading hours and liquidity (24/7 crypto vs. regular equity market hours) complicate synchronization of return series.

Asset‑ and sector‑level relationships

Heterogeneity matters. Bitcoin and Ethereum often show different degrees of correlation with equities. Large cap altcoins can track BTC in rally phases but diverge under idiosyncratic stress.

Equities with direct crypto exposure — miners, custody and exchange operators, GPU vendors and payments firms offering crypto services — typically display higher sensitivity to crypto prices than the broader market. Similarly, crypto ETFs and ETNs (once fully traded and liquid) can show tight co‑movement with the underlying tokens, especially when market‑makers arbitrage basis differences.

When answering "does crypto move with the stock market," it's important to specify which crypto assets and which equity sectors you mean: broad indices may show lower correlation than niche equities tied to crypto activity.

Implications for investors and portfolio construction

Key takeaways for investors:

• Diversification: crypto can add diversification benefits in some regimes but may offer limited protection during global risk‑off episodes when correlations rise.
• Position sizing: higher volatility and potential for tail correlation suggest smaller allocations and stress testing of drawdowns.
• Risk management: consider dynamic hedging, use of options, and volatility targeting to manage tail risk.
• Custody and counterparty risk: choose regulated custodians and platforms; for readers, Bitget offers custodial solutions and institutional features designed to support custody and trading needs.

Remember: historical correlation estimates are not guarantees of future relationships; portfolio design should account for conditional correlation and tail dependence.

Trading strategies and practical considerations

Traders and portfolio managers can use observed correlations in several ways:

• Pairs trading and relative value strategies: when crypto and crypto‑related equities diverge abnormally, mean‑reversion trades may be possible.
• Hedging: equity exposure can be hedged using crypto derivatives or vice versa, but execution risk and basis risk (especially in stressed markets) are real.
• Cross‑asset momentum: incorporate signals from equities into crypto strategies when correlations are high, and avoid mechanical cross‑asset bets when correlation weakens.

Practical cautions:

• Liquidity: even liquid crypto can experience large intraday gaps; use limit orders and consider venue depth.
• Leverage: amplified losses during market stress can create forced liquidations and contagion.
• Options and OTC desks: if using options to hedge, be aware of position limits and trade reporting; industry moves to adjust options limits (e.g., Nasdaq filing on Jan. 21, 2026) may change available capacity.

For active traders seeking institutional features, Bitget provides derivatives, spot markets, and Bitget Wallet custody to support cross‑market strategies while offering tools for risk control.

Financial stability and regulatory considerations

As crypto grows, regulators monitor potential spillovers to traditional financial systems. Concerns include:

• Leverage: concentrated leverage in crypto can lead to rapid deleveraging and contagion across markets.
• Custody failures: sudden losses at large custodians or exchange‑like entities can create run dynamics.
• Market interconnection: if major asset managers use crypto in broader strategies, shocks to crypto may transmit to pensions, insurers, and banks indirectly.

Regulatory actions — approvals for ETFs, rules for tokenization, and options market changes — both mitigate and shift risk. For example, Nasdaq’s request on Jan. 21, 2026 to align options limits for crypto ETFs with other ETF rules aims to standardize treatment and could reduce market‑structure friction that previously complicated arbitrage.

Common misconceptions

Several myths about the relationship between crypto and stocks recur:

• Myth: "Crypto is always uncorrelated with stocks." Reality: correlation is conditional and has risen in many periods.
• Myth: "Crypto is a universal hedge." Reality: crypto has not reliably hedged equities during systemic shocks and can fall in tandem with risk assets.
• Myth: "A single study settles the question." Reality: results depend on time windows, assets, and methods — the literature is mixed and evolving.

Future outlook and open research questions

Looking ahead, determinants that may shape whether crypto moves with the stock market include:

• Further institutional adoption and ETF product evolution.
• Regulatory clarity and reporting standards for tokenized products and ETFs.
• Deepening of options and OTC markets for crypto, including potential lifting of position/exercise limits (Nasdaq filing, Jan. 21, 2026).
• On‑chain tokenization of equities and real‑world assets that could blur the distinction between tradfi and on‑chain markets.

Open research questions:

• Will cointegration emerge between crypto and major equity indices as the asset class matures?
• How will 24/7 trading dynamics interact with market microstructure in traditional markets?
• What role will tokenized equities and on‑chain liquidity provision play in cross‑market transmission?

More empirical time series and multi‑market data are needed to answer these questions robustly.

See also

• Bitcoin (BTC) basics and market metrics
• Financial correlation and diversification
• Risk‑on / risk‑off dynamics
• Exchange‑traded funds (ETFs) and options market structure
• Market microstructure and liquidity in 24/7 markets
• Portfolio construction and volatility targeting

References and further reading

Selected empirical and market reports (representative — not exhaustive):

• Rolling correlation and volatility spillover papers on Bitcoin/Equities (academic journals, 2018–2024).
• ARDL and Granger causality studies comparing BTC/ETH with S&P 500 (various authors 2020–2023).
• Industry reports from major exchanges and market‑data providers on ETF flows and options capacity.
• Nasdaq filing with the U.S. SEC dated Jan. 21, 2026 requesting removal of certain position/exercise limits on options for Bitcoin and Ethereum ETFs (affects funds including BlackRock’s IBIT and ETHA as reported in market coverage).
• On‑chain reporting of institutional purchases: Lookonchain reports on BlackRock’s early Jan. 2026 purchases (~9,619 BTC and 46,851 ETH) and Strategy’s BTC buys (22,305 BTC in mid‑January 2026).

Sources used in the article include exchange/regulatory filings, on‑chain trackers, and market commentary as of Jan. 21–22, 2026.

Reporting date and note on data

As of Jan. 21–22, 2026, the above market‑structure developments and on‑chain flow reports were publicly discussed in filings and market coverage. Price and volume snapshots referenced in this article reflect data points reported for Jan. 22, 2026. This article is informational and neutral; it does not constitute investment advice.