The Bitcoin market commenced an extended bearish phase in October 2025, after an initial flash crash triggered a 19% decline from the present all-time high at $126,000. In the last month, Bitcoin has shown a moderate recovery with a net gain of 4.89%, with prices trading as high as $75,000. While this recent performance may be indicative of a stabilizing market, recent data on the correlation between the premier cryptocurrency and the S&P 500 has presented new bearish concerns. In an X post on March 21, market analyst Tony Severino reports that recent developments with the BTC-S&P 500 Correlation Coefficient indicate Bitcoin is in danger of another major downswing.
Notably, the Correlation Coefficient is a figure between -1 and +1 that measures how strongly and in what direction two assets, i.e., Bitcoin and the S&P 500 in this case, move relative to each other over time. Historically, when Bitcoin’s correlation with the S&P 500 drops to -0.5 on the Correlation Coefficient, and then turns sharply up, it is a warning sign that the stock market is going to collapse and take BTC with it. Usually there’s a bounce first to add to the pain. At +1, the coefficient indicates that the assets move exactly together in the same direction, while at -1, a perfect negative correlation occurs, with the assets moving in opposite directions.
Amid the bear market that has persisted since late 2025 and early 2026, the 20-day Bitcoin-S&P Correlation Coefficient dipped to around -0.5 as Bitcoin prices fell while equities rose. However, Severino notes that this coefficient had recently rebounded to around -0.10, creating a market sequence that has previously preceded major Bitcoin downturns. According to the seasoned expert, each time the 20-day BTC S&P 500 correlation dropped to -0.5 before sharply reversing, it has triggered stock market crashes that induced a significant sell-off in the Bitcoin market. However, there is usually an initial price bounce lasting 10-17 weeks before the drawdown commences.
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