Bitcoin’s recent correlation with U.S. stocks raises concerns about its near-term price dynamics, despite ongoing positive trends.
Since the November 5 election of Donald Trump as U.S. president, Bitcoin (BTC) has surged by approximately 47%, far outpacing the 4% rise in the S&P 500 index. Trump’s supportive stance on cryptocurrency, along with the Republican sweep in Congress, has further fueled expectations that the regulatory environment could tilt favorably for Bitcoin in the coming years.
In an interview with CoinDesk, Andre Dragosch, Head of Research at Bitwise in Europe, highlighted the key factors behind the growing divergence between Bitcoin and traditional stock markets.
“Bitcoin’s performance has been stellar, especially in light of the S&P 500’s struggles due to the Fed’s hawkish stance on interest rate cuts,” Dragosch noted. “The Federal Reserve’s decision to reduce its planned rate cuts for 2025 to just two is seen as less dovish than what markets had expected.”
Alongside this, the U.S. Dollar Index (DXY), which tracks the value of the U.S. dollar against a basket of major currencies, has risen by 5%, further pressuring risk assets like Bitcoin. Despite the potential headwinds, Dragosch points out that Bitcoin has managed to hold its ground thanks to persistent factors such as the declining supply of Bitcoin on exchanges. “Bitcoin balances on exchanges have continued to fall, despite profit-taking, which is a sign of strong demand,” he explained.
However, the correlation between Bitcoin and the S&P 500 has recently climbed to 0.88 on the 20-day moving average, as reported by TradingView. While Dragosch remains optimistic about Bitcoin’s long-term outlook, he warns that the increasing correlation with traditional equities could introduce short-term risks, particularly if broader macroeconomic pressures continue to mount.
