Bitcoin (BTC) recently faced downward pressure, briefly falling below the $75,000 threshold amid a broader downturn in traditional markets. However, multiple indicators—including its correlation with the S&P 500, futures market activity, spot BTC ETF performance, and stablecoin demand—suggest the potential for a trend reversal.
On Tuesday, April 6, Bitcoin’s price dipped alongside S&P 500 futures, which hit their lowest level since January 2024. A simultaneous drop in WTI crude oil futures below $60 added to the atmosphere of uncertainty. Despite this, markets later recovered, allowing Bitcoin to climb back near the $78,000 mark.
Bitcoin’s Correlation with Traditional Markets Is Often Short-Lived
While some analysts speculated that Bitcoin had entered a bear market after a 30% pullback from its cycle high, historical data shows numerous instances of strong recoveries. More importantly, periods of high correlation between Bitcoin and traditional markets have typically been brief.
For example, the 40-day correlation between Bitcoin and S&P 500 futures has fluctuated significantly over time. In June 2024, it even turned negative, with the two moving in opposite directions for nearly 50 days. Although the correlation exceeded 60% for 272 days over a two-year period—accounting for about 38% of that time—such phases are statistically inconsistent and often temporary.
Bitcoin’s recent decline to $74,440 reflects broader uncertainty in traditional markets. Still, such high correlation levels have rarely persisted. Moreover, many major tech stocks are currently trading 30% or more below their all-time highs, indicating that the pressure is not unique to crypto.
Gold Has Struggled as a “Store of Value” Between 2022 and 2024
Gold is often presented as the ultimate safe-haven asset, but this narrative overlooks its own volatility. For instance, gold dropped to $1,615 in September 2022 and took three years to recover to its previous all-time high of $2,075.
While gold’s market cap stands at approximately $21 trillion—14 times larger than Bitcoin’s—the gap in assets under management (AUM) for spot ETFs is much smaller. Gold ETFs manage around $330 billion, compared to Bitcoin’s $92 billion. It’s also worth noting that Bitcoin-based instruments like the Grayscale Bitcoin Trust (GBTC) only began trading in 2015, giving gold a 12-year head start in the ETF space.
The Role of Bitcoin ETFs and Resilience in BTC Derivatives
From a derivatives perspective, Bitcoin perpetual futures (inverse swaps) have remained relatively stable, with funding rates hovering near zero. This indicates balanced leverage demand between long and short positions—a stark contrast to the negative funding rates of -0.9% seen between March 24–26, which reflected heightened bearish sentiment.
Additionally, the $412 million liquidation of leveraged long positions between April 6–7 was relatively moderate. By comparison, a 12.6% Bitcoin price drop between February 25–26 triggered $948 million in long liquidations. This suggests traders are either better prepared or less reliant on excessive leverage this time around.
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Finally, demand for stablecoins—particularly in China—offers further insight into market sentiment. Strong retail crypto demand usually drives stablecoin premiums above 2% relative to the official USD/CNY rate. In contrast, a premium below 0.5% typically signals fear as traders exit crypto markets.
Even as Bitcoin fell below $75,000, the Tether (USDT) premium held steady at around 1% as of April 7. This implies that investors may be rotating into stablecoins while waiting for confirmation that U.S. equities have bottomed before re-entering crypto positions.
Frequently Asked Questions
Why did Bitcoin drop below $75,000?
Bitcoin’s price declined in sync with traditional markets, particularly following a dip in S&P 500 futures and WTI crude oil prices. Short-term market uncertainty and leveraged trading also contributed to the volatility.
Is Bitcoin still correlated with the stock market?
While Bitcoin sometimes correlates with equities during periods of market stress, this relationship is often short-lived. Data shows that extended negative or low-correlation phases are common.
What signals suggest Bitcoin may have bottomed?
Neutral funding rates, moderate liquidation volumes, stable stablecoin premiums, and continued institutional interest via ETFs all indicate that the market may be finding support near current levels.
How does gold’s performance compare to Bitcoin’s?
Gold has shown significant volatility in recent years and took three years to reclaim its prior all-time high. Bitcoin—though younger and smaller in market cap—has often demonstrated stronger recovery momentum.
What is the significance of stablecoin demand?
High stablecoin premiums typically indicate high demand to enter crypto markets, while low premiums suggest caution or capital outflow. A stable premium near 1% may signal a balanced sentiment.
Are Bitcoin ETFs influencing market behavior?
Yes, the growing adoption of Bitcoin ETFs has added a layer of institutional demand that can provide support during downturns and reduce the impact of retail-led liquidations.
Historically, Bitcoin’s correlation with the S&P 500 has been unreliable over the long term. Current metrics—such as near-zero funding rates, manageable liquidation volumes, and stable stablecoin premiums—suggest that Bitcoin may have established a local bottom around the $75,000 region.