S&P 500 Priced in Bitcoin (SPX/BTC)

Think of it this way

It is the difference between two runners in the same race. The absolute times depend on the wind that day; the distance between them does not.

What is S&P 500 Priced in Bitcoin (SPX/BTC)?

How many bitcoins one S&P 500 point costs. It is the index priced in bitcoin instead of dollars, and it tells you which of the two is winning in a single line. The same comparison can be made by overlaying both series rebased to 100, but there you have to infer it from the gap between two curves; here it is the slope.

How to read S&P 500 Priced in Bitcoin (SPX/BTC)

It rises when the S&P outperforms bitcoin; it falls when bitcoin outperforms the S&P. The level on its own says nothing, because it depends on how many zeros each price has: what you read is the slope and the turns. A flat stretch does not mean nothing is happening; it means the same thing is happening to both. The Invert button flips the pair and shows it as BTC/SPX, which is the same division the other way round. There is only data on days when both trade: bitcoin trades seven days a week and the stock market does not, and carrying Friday's close into Saturday would invent a ratio nobody could have traded.

What S&P 500 Priced in Bitcoin (SPX/BTC) means for the market

Both respond to the same liquidity, but not with the same force. Bitcoin has no profits to support it and no dividend to collect, so when money flows in it tends to run further and when money flows out it tends to fall further. That is why this ratio works as a thermometer of risk appetite within risk assets: falling, the market is paying for the most volatile; rising, money is retreating toward what at least has companies behind it.

Where the money flows

No money flows through a ratio: it is not a market, it is a division between two prices that are. What is interesting is what disappears when you divide. Both prices are in dollars, so the dollar cancels out: a stretch in which both rise because the dollar weakens leaves this line flat, even though the two series are each rising. What remains is money moving from one asset to the other, with the currency taken out.

What to watch in S&P 500 Priced in Bitcoin (SPX/BTC)

Look at it alongside Net Liquidity. When liquidity rises and this ratio falls, new money is going into the riskiest assets. When liquidity rises and the ratio rises too, money is coming in and staying in defensive assets, which is the more uncomfortable of the two combinations.

It does not measure liquidity: it measures which of the two assets is getting it.