Does the price of coins drive stock prices up? Research company finds subtle relationship between Bitcoin and stocks

Nautilus Investment Research recently said that whenever the price of Bitcoin soars, stock prices will also rise. Last month, the price of Bitcoin rose by nearly 80%, and the S&P 500 (Standard & Poor's 500 Index) also ushered in a sharp rise. It seems that the price of Bitcoin is closely related to the rise in stock prices.

This Business Insider article states:

According to Nautilus Investment Research, Bitcoin’s huge gains turned out to be tied to strong performance in stocks.

Nautilus Investment Research detailed that after Bitcoin prices increased by 30% in a certain month, the prices of various stocks also rose in the following months. They used a chart to show how Bitcoin "driven" Speaker's stock price.

Why has Bitcoin become a driving force for stock prices?

It is not clear why Bitcoin can drive stock prices up, and the correlation between the two is unknown. Some people believe that the enthusiasm and excitement of Bitcoin traders has also spread to Wall Street. Business Insider also made a similar point:

When traders go crazy for highly speculative investments like Bitcoin, this risk-loving attitude is likely to emerge among stock traders as well. It is not clear whether there is a correlation between the two, nor is there a factor that drives demand for both.

Bitcoin price spillover and the Japan effect

There may be another reason why stock prices rise with the price of the currency. Some companies have a direct relationship with Bitcoin. Therefore, the price of Bitcoin in Japan is positively correlated with stock prices. It seems that the general rise in stock prices appears in the form of a spillover effect and is closely related to the price of Bitcoin. For example, if a Japanese company integrates Bitcoin, their stock price may rise.

In June, a report by Babbitt mentioned this phenomenon.

The stocks of small and medium-sized listed exchange companies that have integrated Bitcoin into their business have also seen a similar upward pattern. According to Bloomberg, Naoki Murakami, a well-known Japanese day trader (short-term trader), said, "The rise in stocks always coincides with the rise in the price of the currency."

The same effect is unlikely to be seen in the U.S., though. While cryptocurrencies have certainly made further inroads into the market, stocks of companies not tied to Bitcoin have also risen — so there may be some subtle relationship between Bitcoin and stocks, but no one can say for sure. What is certain is that there is a lot of excess capital at the moment, as Bitcoin’s current market cap is $55 billion. With Bitcoin’s price at $3,354 at press time, there is definitely excess capital flowing into the stock market.