Very Curious Bitcoin Price Correlation with an Unexpected Fruit Markets

TL;DR

• Bitcoin’s correlation with world stocks dipped to -0.23 in mid-November, indicating a low correlation since early 2020, but it still showed a strong annual correlation in 2020, highlighting its diversity for stock-heavy portfolios.
• The correlation between Bitcoin and global orange prices has increased, with orange prices rising 180% and Bitcoin 230% from January 2020 to August 2023, suggesting Bitcoin’s price movements may reflect U.S. dollar inflation.
• Decreased orange supply in 2023 due to weather changes led to higher prices, paralleling Bitcoin’s upcoming supply halving expected to affect its price, mirroring its historical trend over 15 years.

Forget the Bitcoin (BTC)-stocks correlation. As of mid-November, the 30-day correlation coefficient between Bitcoin and world stocks dipped to negative 0.23, its lowest level since the beginning of the 2020 pandemic.

However, by the end of 2020, Bitcoin’s correlation to stocks for the year reached its highest on record. That reveals the world’s leading crypto is truly a way to add diversity to a stock-heavy portfolio.

But Bitcoin does bear a remarkable correlation to a certain global commodity: oranges.

A Growing Oranges-to-Bitcoin Price Correlation

Here’s a juicy bit of data: this August, the average global price of a pound of oranges was $3.13, according to data from the IMF. By October, orange prices had soared to $3.84, a rise of 22%.

Meanwhile, Bitcoin’s average daily closing price in August was $27,852. But the closing Bitcoin price by October 31 was $34,667, a rise of 24% over August’s daily closing price.

Between January 2020 and August 2023, orange prices rose 180%, while BTC rallied 230%. So, the oranges-to-Bitcoin price correlation increased markedly over the past three months.

The long-term and more recent trend in BTC and orange prices is evidence that Bitcoin’s price gains are simply a measure of U.S. dollar inflation.

Orange Juice Hits New Record High 🚨: The squeeze of squeezes continues as OJ hits 425 for the first time in history. Some day we will tell our kids about this! pic.twitter.com/XQh965IScT

— Barchart (@Barchart) November 20, 2023

Bitcoin Supply Halving Concentrates Demand

Granted, the supply of oranges drastically decreased this year. That’s why the price of oranges, orange juice, and orange futures climbed even as the Fed pushed the breaks on new dollar supplies.

The U.S. Agriculture Department expects Florida to produce just 15.9 million boxes of oranges in 2023. That’s down 70% from the 2020-21 season. Production in Brazil and Mexico also fell because of warmer weather this year due to El Nino.

But that’s a good illustration of the economics that support Bitcoin’s stellar price gains over its 15-year history. Bitcoin price markets on cryptocurrency exchanges are currently factoring in an upcoming decrease in the BTC supply that will happen next year – the four-year supply halving.