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Have you noticed this week that the price of Bitcoin has seemed to ebb and flow with the volatility we’ve seen in the stock markets?

Well, you’re not imagining that. Just as stocks sold off globally on Monday, so did Bitcoin. In the U.S., the Dow fell as much as 1,175 points on Monday. Later on that night, Bitcoin’s price fell too, to just below $6,000.

Then on Tuesday, the Dow recovered mightily, swinging almost 1,000 points higher. Bitcoin’s price also ticked higher, and was enjoying being above $8,000 and holding there.

But is this correlation a coincidence, or is it an indication of how the two may correlate in the future in terms of movement? Let’s discuss.

Correlation vs. causation

The subject came up Wednesday with the folk’s on CNBC’s Fast Money show. While they pointed to the parallels between the Dow and Bitcoin’s price, they also noted the similar movements between the S&P 500 and Bitcoin.

Here’s how correspondent Bob Pisani answered the question about whether Bitcoin and the S&P 500 were correlated.

“It might seem that way based on last week. Bitcoin bounced on Tuesday like the markets bounced. There is some correlation now, but longer term, the correlation will be much weaker.”

He noted that Bitcoin and other large cap cryptos have very low correlation with the S&P 500. However, as the number of people trading cryptos increases, it’s possible that the correlation will go up.

Then there is the matter of whether people who are invested in Bitcoin are also invested in the stock market, or vice versa. There are no clear statistics on this matter, but those who are invested in both are likely more prone to move their investments and trades around based on what the other is doing.

Pisani said it boils down to causation vs. correlation, which the panel quickly adopted as the mantra for the price movements.

It should be noted that the reasons stocks sold off and Bitcoin’s price fell are completely different. Monday’s stock market slide is being largely attributed to a new-fangled security that is thought to have exaggerated movements in volatility futures markets and even the overall stock market, notes CNBC.

As far as Bitcoin’s precipitous fall, there are myriad issues. They range from the backlash from credit card companies that won’t allow customers to use their plastic anymore to buy cryptos, to countries banning cryptos outright.

Banker weighs in

Joining the panel was Chris Harvey of Wells Fargo. He said there was a correlation between the price movements of cryptos and stocks. He said that over the next three to six months, he saw equities up 10%.

“I wouldn’t be surprised to see cryptocurrencies go up too. If we're right, what we should see is risk product going higher.”