Bitcoin Correlation With S&P 500 Raises Risk of Major Price Decline

Bitcoin has moved back into alignment with broader risk assets, particularly U.S. equities, after losing part of its recent gains. The 20-week rolling correlation between Bitcoin and the S&P 500 has shifted into positive territory, reaching 0.13 after previously falling near -0.5. Historically, similar reversals in correlation since 2018 have been followed by significant Bitcoin downturns, raising concerns about further downside pressure in the market.

Historical Data Shows Potential for 50% Bitcoin Drop

Past cycles indicate that when Bitcoin begins tracking stock market movements more closely, it has often experienced major declines averaging about 50%. If this historical pattern repeats, a drop of that scale from current levels near $68,700 would place Bitcoin close to the $34,350 range. Previous downturns in 2020 and 2022 also occurred months after temporary rallies, commonly described as bull traps.

Macro Pressure and Corporate Buying Pause Add Caution

Rising oil prices, persistent inflation, and reduced expectations for interest rate cuts continue to weigh on risk assets. At the same time, corporate Bitcoin accumulation has slowed, adding to cautious sentiment across the market.

Analyst Tony Severino said;

Disclaimer

This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.