Bitcoin retraced much of the gains it saw amid the US–Iran conflict this week and is again tracking the broader downtrend in risk assets, most notably US equities.
Snapshot
– BTC/USD was down roughly 5.65% week-to-date, trading near $68,700 as of Sunday. The S&P 500 closed the week about 1.90% lower.
– The 20-week rolling correlation between Bitcoin and the S&P 500 climbed to roughly 0.13 from a recent low near -0.5.
Why the correlation matters
A renewed positive correlation with stocks raises the odds of further downside for Bitcoin. Since 2018, episodes where the BTC–S&P 500 correlation flipped sharply higher have tended to precede large Bitcoin drawdowns averaging near 50%. If that historical pattern repeated from current levels, a 50% decline would put BTC near $34,350.
“It is a warning sign that the stock market is going to collapse and take BTC with it,” analyst Tony Severino wrote, reflecting a common market concern that Bitcoin’s fate is increasingly tied to equity market stress.
Historical context
Past episodes—most notably the 2020 and 2022 shifts—show Bitcoin staging what looked like sustainable rallies while its correlation to stocks climbed, only to reverse months later in broad sell‑offs that erased gains. These “bull trap” patterns are one reason traders watch correlation measures closely.
Macro backdrop
Several macro factors point to continued vulnerability for risk assets, including Bitcoin: elevated oil prices, persistent inflationary pressure and falling odds of Federal Reserve rate cuts. Together, those dynamics increase the chance that weakness in equities could spill over into crypto.
Institutional accumulation has paused
Bitcoin’s renewed link to equities coincides with a pause in some institutional buying. MicroStrategy (MSTR), among the largest corporate holders of BTC, did not purchase Bitcoin via its STRC preferred stock program this week, according to STRC.LIVE. MicroStrategy’s last disclosed acquisition, announced March 16, added 22,337 BTC (about $1.57 billion), bringing its disclosed total to 761,068 BTC. That buying period saw Bitcoin rise roughly 10.5%, and STRC-fueled accumulation helped support BTC’s rally during the US–Iran episode. With no fresh disclosed purchases this week, Bitcoin may be more exposed if a stock-driven sell‑off unfolds.
Outlook and caution
Some analysts have projected Bitcoin could revisit the $30,000–$40,000 range in 2026 if macro pressures persist and correlations with equities remain elevated. Investors and traders should weigh the historical patterns, current macro risks and any changes in institutional buying when assessing exposure.
This article is for informational purposes and does not constitute investment advice or a recommendation. All trading and investment decisions carry risk; readers should do their own research and consider their individual circumstances. While information here is believed to be accurate at the time of publication, it may be incomplete or subject to change.