Investigation of the interaction between S&P 500 index and cryptocurrency exchanges using Granger analysis method

The concept of money has existed as a medium of exchange and a measure of value, forming the foundation of economic relations since its inception. With technological advancements and digital transformation, especially the function and form of money have significantly evolved, and with the development of blockchain technology, cryptocurrencies (digital currencies) have secured a place in the financial system. Cryptocurrencies have been adopted as an alternative investment instrument by both individual and institutional investors due to their decentralized structure, principles of transparency, and rapid transaction capabilities. In this context, the term "investor" refers to individuals or institutions that purchase assets with the expectation of future appreciation in value. This study analyzes the existence of a causality relationship between the changes in the S&P 500 index—one of the leading indicators of traditional financial markets—and cryptocurrency markets using the Granger causality test. In this causality analysis, Bitcoin was selected as the cryptocurrency, based on CoinMarketCap data indicating that it had the highest market capitalization and trading volume within the time frame of the study. The sharp increase in Bitcoin's price in January 2021 played a key role in determining the starting point of the analysis. Bitcoin's rise in 2021 contributed positively to the trust in cryptocurrency markets and to the growing interest of traditional investors in these markets. The S&P 500 Index was chosen due to its strong representational power in global financial markets. As it reflects the behavior of both individual and institutional investors, the index is considered a leading indicator of the traditional financial system. Accordingly, it is expected to serve as a reliable and meaningful reference point in analyzing the potential relationships between cryptocurrency markets and traditional financial markets. In line with this, Bitcoin and S&P 500 data covering the period from January 2021 to October 2024 were obtained on a weekly basis from the Investing.com platform and analyzed. The findings aim to provide insights into the impact of changes in the S&P 500 Index—used in traditional financial markets—on cryptocurrency markets, and to deepen the understanding of how investor behavior influences the relationships between traditional and crypto financial markets.