- Bitcoin gave back most of its geopolitical gains this week, moving back toward $68,700 and renewing its correlation with the S&P 500.
- Historically since 2018, such a positive flip in correlation has preceded average Bitcoin declines of around 50%.
- The pause in Bitcoin purchases by large corporate holder Strategy (MSTR) removed a key support, leaving BTC more exposed to a potential equity sell-off.
Bitcoin erased most of its recent geopolitical-driven gains this week, falling back into sync with a broader stock market downturn. As of Sunday, BTC had retreated over 5% to approximately $68,700 while the S&P 500 closed the week nearly 2% lower.
This renewed positive correlation with equities is now flashing a significant bearish warning. According to historical analysis, sharp recoveries in the BTC-SPX correlation have preceded steep declines for Bitcoin.
Since 2018, these correlation shifts have been followed by Bitcoin market drops averaging roughly 50%. Analyst Tony Severino said this pattern indicates “the stock market is going to collapse and take BTC with it.”
Applying that historical precedent would imply a potential downside target near $34,350. Consequently, this aligns with projections from multiple analysts who see Bitcoin potentially falling to between $30,000 and $40,000 in 2026.
Macroeconomic pressures are currently supporting this cautious outlook. Elevated oil prices, persistent inflation, and lower odds of Federal Reserve rate cuts create a challenging environment for risk assets like Bitcoin and stocks.
Meanwhile, a key source of recent buying support has paused. Corporate giant Strategy did not purchase more Bitcoin this week via its STRC preferred stock sales, according to data.
Its previous massive purchase of 22,337 BTC worth $1.57 billion had helped fuel Bitcoin’s rally during recent tensions. The absence of fresh corporate accumulation now leaves Bitcoin more vulnerable to following any broader sell-off in equities.
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