Bitcoin risks a significant price drop due to its growing positive correlation with US stocks, based on historical data.
Bitcoin has erased gains from recent geopolitical events and is now aligning with a downward trend in US equities, according to CoinTelegraph. As of Sunday, BTC/USD traded at about $68,700, marking a 5.65% decline for the week, while the S&P 500 closed 1.90% lower.
Historical Correlation Signals Risk
The 20-week rolling correlation between Bitcoin and the S&P 500 reached 0.13 as of Saturday, up from a low of around -0.5. Since 2018, such increases in correlation have preceded average Bitcoin price drops of about 50%.
Analyst Tony Severino described this as a warning sign that could lead to a stock market collapse affecting Bitcoin. A 50% drop from current levels would bring Bitcoin to approximately $34,350.
Multiple analysts have projected Bitcoin could fall to between $30,000 and $40,000 in 2026, based on past patterns observed in 2020 and 2022, where declines followed bull traps after initial rallies.
Macroeconomic factors, including elevated oil prices, persistent inflation, and reduced expectations for Federal Reserve interest rate cuts, are contributing to a bearish outlook for both Bitcoin and equities.
MicroStrategy, a major Bitcoin holder, has paused its purchases this week, with its last acquisition on March 16 adding 22,337 BTC worth $1.57 billion, bringing its total to 761,068 BTC. This halt leaves Bitcoin more vulnerable to broader market sell-offs.
