Bitcoin (BTC) gave back much of the US–Iran war-driven gains this week, realigning with the broader downtrend in risk assets—most notably US equities.
Key takeaways:
– Bitcoin’s recent flip to a positive correlation with the S&P 500 has historically preceded average declines near 50% since 2018.
– Rising macro pressure leaves BTC vulnerable to a wider risk-asset sell-off.
As of Sunday, BTC/USD was down about 5.65% week-to-date at roughly $68,700, while the S&P 500 closed the week down 1.90%.
A renewed correlation with stocks is increasing the risk of further downside for Bitcoin. The 20-week rolling correlation between BTC and the S&P 500 rose to about 0.13 from a recent low near -0.5. Since 2018, sharp recoveries in that correlation have preceded broader Bitcoin market drawdowns averaging roughly -50%.
“It is a warning sign that the stock market is going to collapse and take BTC with it,” analyst Tony Severino wrote.
A 50% drop from current levels would imply a target near $34,350 if the historical pattern repeats. Several analysts have projected Bitcoin could fall to the $30,000–$40,000 range in 2026.
In past episodes—most notably 2020 and 2022—Bitcoin’s declines followed months after apparent “bull traps,” where BTC rallied alongside rising correlation with equities before reversing and erasing gains.
Macro variables such as elevated oil prices, rising inflation, and diminished odds of Federal Reserve rate cuts support a bearish outlook for both equities and Bitcoin in the months ahead.
Strategy pause adds to cautious outlook
Bitcoin’s renewed tie to equities coincides with a pause in corporate accumulation. Strategy (MSTR), one of the largest institutional Bitcoin holders, did not buy BTC via sales of its STRC preferred stock this week, per STRC.LIVE.
Strategy’s last disclosed acquisition, announced March 16, added 22,337 BTC worth $1.57 billion, bringing its total to 761,068 BTC. Bitcoin rose around 10.50% during that buying period, outpacing US stocks. That STRC-fueled buying helped support BTC’s rally during the US–Iran conflict; with no fresh purchases this week, Bitcoin is more exposed to a potential stock-market-driven sell-off.
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