Bitcoin and U.S. Stocks Move in Lockstep Again: What the Renewed Stock Correlation Means for Crypto

The cryptocurrency and equity markets are experiencing a significant realignment. While bitcoin and U.S. stocks diverged sharply following Donald Trump’s November 5 election victory, recent weeks have seen these traditionally disconnected asset classes begin moving closely together once again. This renewed correlation between bitcoin and equities could signal both opportunities and risks for digital asset investors navigating an increasingly interconnected financial landscape.

The initial decoupling after Trump’s election appeared logical. Bitcoin surged on expectations of a crypto-friendly administration and Republican control of Congress, while the S&P 500 faced headwinds from other macroeconomic concerns. However, as markets have evolved, both asset classes are now tracking in remarkable synchrony, with their 20-day correlation reaching 0.88—a level indicating near-perfect alignment.

Why Macro Factors Are Pulling Stocks Lower

The recent weakness in equity markets stems largely from monetary policy developments. The Federal Reserve’s December decision to signal only two rate cuts for 2025, down from previous expectations, created uncertainty for risk assets broadly. Simultaneously, the U.S. Dollar Index (DXY) has appreciated approximately 5%, adding downward pressure on commodities and alternative assets.

According to Bitwise’s European research team, these macro crosscurrents created divergent pressures on the two asset classes. Traditional stocks suffered from the restrictive policy outlook, while bitcoin initially benefited from other tailwinds that offset the dollar strength impact. Exchange balance data from Glassnode revealed that despite profit-taking activity, bitcoin holdings on exchanges continued declining—a pattern suggesting underlying strength from long-term holders willing to move coins into self-custody.

This divergence couldn’t sustain indefinitely. As macro uncertainty persists and equity weakness deepens, bitcoin has begun following the stock market’s lead more closely than at any point since the election.

On-Chain Strength Meets Macro Uncertainty

The cryptocurrency’s resilience during the dollar rally earlier this year highlighted how on-chain factors can diverge from macroeconomic headwinds. Bitcoin’s constrained exchange supply—indicating less coin availability for selling—provided a fundamental floor that stocks simply don’t have.

However, analysts now caution that these on-chain advantages may prove insufficient if broader equity weakness accelerates. The question isn’t whether bitcoin fundamentals remain intact, but whether macro conditions will override on-chain tailwinds that have supported prices through most of the cycle.

Technical Rebound or False Signal?

Bitcoin recently bounced sharply back toward $69,000 following weeks of selling pressure, igniting similar rallies in altcoins including Ethereum, Solana, and Dogecoin. Crypto-related equities like Coinbase and Circle also participated in the rebound.

However, market participants from LMAX Group and other institutional venues suggest caution interpreting this move. The jump appears driven primarily by short-covering and technical positioning in thin liquidity conditions rather than fundamental catalysts. This distinction matters significantly: a bounce born from forced buying behavior may lack the durability of moves supported by genuine demand.

Resistance Levels and the Path Forward

For bitcoin to establish a more constructive technical structure, prices must break and hold above critical resistance zones around $72,000 and $78,000 on a sustained basis. Until those levels are cleared convincingly, the rally risks remaining a tactical correction within a broader downtrend.

Fund activity shows rotation into more volatile altcoin positions and derivative strategies, according to insights from institutional trading venues. This behavior suggests traders are assessing the bounce as opportunity for tactical participation rather than conviction in a structural recovery.

What Renewed Correlation Means for Strategy

The 0.88 correlation reading presents a fundamental challenge for digital asset portfolios. When bitcoin moves with stock indices, its diversification value—a key selling point for institutional adoption—diminishes significantly. This reality means investors must monitor whether the correlation persists or represents another temporary alignment.

Market observers from leading crypto research firms note that on-chain factors should remain supportive through mid-2025, potentially providing a floor even if macro deterioration accelerates. Yet the elevated correlation with equities introduces near-term risks that investors cannot ignore. This dynamic requires active portfolio management and careful positioning around key resistance and support levels as macro uncertainty persists.