Bitcoin And S&P Decline Together, But Data Predicts A Turnaround

Bitcoin is not the only one that has suffered. Investors are becoming concerned as the flagship cryptocurrency has followed the recent decline in the S&P 500. But if past performance is any indication, Bitcoin might be experiencing a resurgence.

United States President Donald Trump assumed office in November for a second term, but since then, the US stock market has dropped by about 10%. Since the global recession hit the markets hard in 2009, this is the worst start to a US presidency. Although there are numerous causes for this decline, uncertainty on economic strategy and worries about inflation have contributed.

In the past, it has often signaled impending volatility when the S&P 500 and Bitcoin decline simultaneously. The bear market of 2022, which saw prolonged losses, was the last time both markets fell precipitously at the same time. Not all dips, though, lead to protracted downturns. Some have led to a notable rebound, especially since the cryptocurrency’s halving cycles.

How is the market reacting to Trump’s second term?

Since his return, the S&P 500 has fallen 9%, marking the worst start to a presidency since 2009.

Back then, a recession drove the drop. This time, uncertainty is in the driver’s seat.

Let’s dive into the data pic.twitter.com/A10F0qtweB

— CryptoQuant.com (@cryptoquant_com) March 12, 2025

Bitcoin has long been known as “digital gold,” but it is now functioning more like a tech stock. According to a CryptoQuant research, Bitcoin’s price has tracked traditional markets, particularly the S&P 500. This pattern is not new. During the COVID-19 pandemic in March 2020, the crypto and stocks fell together before recovering later that year.

But IntoTheBlock analysts found that Bitcoin’s relationship to the S&P 500 has dropped to essentially zero. This would suggest that, in line with long-term holders’ pattern, BTC is starting to migrate outside of conventional finance.

Should this decoupling continue, the movement in the price of Bitcoin might rely less on changes in the stock market.

According to CryptoQuant, prior data shows that Bitcoin has frequently rebounded following strong corrections. For example, in 2018, Bitcoin lost approximately 80% of its value before recovering in 2019. Similarly, following the 2020 crash, Bitcoin reached fresh all-time highs in 2021.

Another statistic to keep an eye on is the Coinbase Premium Index, which measures the difference in Bitcoin prices between Coinbase and Binance. When this indicator goes negative and then returns to positive territory, it has typically indicated an impending price rebound.

Meanwhile, market analysts remain divided. Some warn that Bitcoin’s downturn could signal that the overall stock market rise is unsustainable. Tyler Richey, co-editor of Sevens Report Research, stated that Bitcoin’s underperformance compared to its January peak could be a warning sign for equities.

Featured image from Gemini Imagen, chart from TradingView