Bitcoin and S&P 500 Correlation Suggests Possible Market Downturn

In October 2025, the Bitcoin market entered a prolonged bearish trend following a sudden flash crash that caused a 19% decrease from its record high of $126,000. Over the following months, the price of Bitcoin saw a steady decline, including several significant downturns, ultimately hitting a local bottom of $60,000 before experiencing a consolidation phase. Recently, however, Bitcoin has shown a slight recovery, gaining 4.89% with prices reaching as high as $75,000. While this uptick may suggest market stabilization, new data concerning the correlation between Bitcoin and the S&P 500 raises some bearish alarms.

Key Takeaways:

Bitcoin has entered a bearish phase since October 2025, with a significant decline following an initial flash crash.
It has shown a slight recovery recently, but correlation data with the S&P 500 raises concerns about a possible downturn.
A correlation coefficient drop to -0.5 historically indicates impending market crashes.
Current trading conditions show a recent decline in Bitcoin's price and trading volumes.

Bitcoin

Correlation Coefficient Data Signals Potential Crash

Market analyst Tony Severino shared insights on March 21 regarding the Bitcoin-S&P 500 Correlation Coefficient, suggesting that Bitcoin could face another major decline. The Correlation Coefficient, which ranges from -1 to +1, measures the degree and direction of the relative movement between two assets, in this case, Bitcoin and the S&P 500.

Key Observations
Historically, when the correlation coefficient for Bitcoin with the S&P 500 drops to -0.5 and then sharply rises, it's often an indicator of an impending stock market crash that could also negatively impact Bitcoin. There may be an initial bounce followed by greater declines.
— Tony Severino, CMT (@TonySeverinoCMT), March 21, 2026

At a coefficient of +1, the assets move in perfect unison, while a -1 indicates they move in opposite directions. A coefficient of 0 means their movements are unrelated.

In the ongoing bear market that began in late 2025, the 20-day Bitcoin-S&P 500 Correlation Coefficient fell to about -0.5 as Bitcoin prices dropped while equities increased. However, this coefficient has recently rebounded to roughly -0.10, which historically has preceded significant downturns in Bitcoin's price.

Bitcoin
Source: @TonySeverinoCMT on X

Severino points out that each instance where the 20-day BTC-S&P 500 correlation fell to -0.5 and then sharply reversed has led to stock market crashes, causing notable sell-offs in the Bitcoin market. Typically, there’s an initial bounce lasting 10-17 weeks before a decline begins. Severino believes the modest rebound since early February represents this initial gain, which is now nearing 8 weeks in duration.

As seen in 2018, 2020, and 2022, such corrections have been known to result in a price drop of 70-80% from the peak of the initial bounce.

Current Market Conditions for Bitcoin

As of now, Bitcoin is trading at $68,584 after a 2.41% decrease in the last 24 hours. Additionally, daily trading volume has decreased by 41.21%, indicating reduced participation from traders as Bitcoin continues its consolidation following an unsuccessful breakout past $75,000 last week.

Bitcoin
BTC trading at $68,792 on the daily chart | Source: BTCUSDT chart on Tradingview.com