Definition ∞ Bitcoin correlation measures the statistical relationship between Bitcoin’s price movements and those of other assets or market indices. A positive correlation indicates that Bitcoin’s price generally moves in the same direction as the other asset. A negative correlation suggests an inverse relationship, while zero correlation implies no discernible pattern. This metric helps assess diversification benefits.
Context ∞ The debate over Bitcoin’s status as a safe-haven asset or a risk asset often centers on its correlation with traditional financial markets. Periods of high correlation with equities might suggest Bitcoin is behaving like other growth assets. Low or negative correlation could indicate its value as a diversifier in investment portfolios. Understanding this dynamic is crucial for portfolio construction.
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