Bitcoin (BTC) has sharply retraced its recent gains, falling 5.65% this week to approximately $68,700, as it aligns with a broader downturn in risk assets, particularly U.S. equities. The correlation between Bitcoin and the S&P 500 (SPX) has shifted significantly, rising to 0.13 from a low of -0.5, historically indicating that such recoveries often precede average declines of around 50% in Bitcoin’s price. This trend raises concerns as analysts warn of a potential Bitcoin drop to between $30,000 and $40,000 by 2026, with macroeconomic pressures like high oil prices and inflation compounding the bearish outlook.
The lack of fresh purchases from major Bitcoin holder Strategy (MSTR) further heightens the risk for BTC, as their previous acquisitions had supported its rally during geopolitical tensions. With no new buying activity reported this week, Bitcoin appears increasingly vulnerable to a sell-off, mirroring the performance of equities.
Market professionals should closely monitor the evolving correlation between Bitcoin and the SPX, as historical patterns suggest that a downturn in stocks could lead to significant declines in Bitcoin prices.
Source: cointelegraph.com