BTC Highly Correlated with US Stocks at 0.8 but More Sensitive to Downturns
Wintermute research indicates that Bitcoin’s correlation with US equities, especially the Nasdaq index, remains high at approximately 0.8. However, BTC correlation with US stocks is asymmetrical: it shows stronger responses to Nasdaq downturns and muted reactions to rallies. This market sensitivity aligns with the negative bias last seen at the end of 2022. The heightened downward sensitivity highlights increased risk for Bitcoin during equity sell-offs. Traders should closely monitor US stock movements, particularly the Nasdaq, as signals for potential Bitcoin drawdowns. With a persistent BTC correlation with US stocks and amplified reactions to downside events, cautious trading and robust risk management are advised amid mounting equity market volatility.
Bearish
Bitcoin’s heightened sensitivity to US stock downturns signals amplified downside risk, categorizing the news as bearish. With BTC correlation with US equities at 0.8 and stronger reactions to Nasdaq declines, traders may face sharper crypto sell-offs during equity market stress. Historical parallels from late 2022 demonstrate similar patterns leading to significant Bitcoin drawdowns. In the short term, increased market sensitivity could trigger rapid price drops alongside US stocks. Over the longer term, the persistent BTC-equity correlation underscores ongoing vulnerability to systemic market movements, advising cautious positioning and robust risk management.