Bitcoin and S&P 500 Correlation Resurfaces: How Global Market Indices Are Moving in Sync

The divergence between bitcoin and traditional market indices that emerged following Donald Trump’s election win is reversing course. Recent data shows Bitcoin and the S&P 500 have rekindled their synchronized movements, with their correlation coefficient climbing to 0.88 over the latest 20-day window—a level indicating they’re moving nearly in lockstep. At current prices around $68,280, Bitcoin demonstrates the complex interplay between on-chain dynamics and macroeconomic forces shaping cryptocurrency markets.

Since November 5, when Trump secured the U.S. presidency, Bitcoin has surged approximately 47% while the S&P 500 advanced just 4%. The incoming administration’s pro-crypto stance and Republican control of Congress initially drove this outperformance. However, shifting macro conditions have begun realigning these asset classes more closely than in recent months.

Federal Reserve Policy Synchronizes Bitcoin with Broader Markets

The culprit behind the renewed correlation lies partly in the Federal Reserve’s December decisions. The central bank revised its 2025 rate cut expectations downward to just two cuts, catching traditional markets off-guard and dampening equity performance. Simultaneously, the U.S. Dollar Index climbed 5%, typically weighing on risk assets including cryptocurrencies.

Yet Bitcoin showed surprising resilience despite headwinds that should have pressured it. Andre Dragosch, Head of Research at Bitwise in Europe, attributes this partial offset to positive on-chain fundamentals. “While macro factors like the interest rate outlook have held back broader markets over the past two months, Bitcoin has benefited from declining exchange balances and a favorable political backdrop,” Dragosch explained in remarks to CoinDesk.

Exchange Balance Dynamics Provide Temporary Support

Bitcoin’s exchange supply has continued its downward drift even as traders took profits—a pattern suggesting reduced selling pressure and potential accumulation. This metric acts as a tailwind for price appreciation, offsetting some macro headwinds that would normally suppress risk appetite across all asset classes, including global market indices.

However, Dragosch warns that this structural advantage may prove temporary. “On-chain factors will likely provide significant momentum at least through mid-2025, but deteriorating macro conditions could introduce short-term volatility,” he cautioned, noting the “relatively high correlation with the S&P 500” poses an emerging constraint on Bitcoin’s independent movement.

Technical Rally Amid Thin Market Conditions

Bitcoin recently jumped back above $69,000 in a sharp technical rebound that reverberated across altcoins and crypto equities. Ethereum, Solana, Dogecoin, and Cardano all surged, as did crypto-related stocks including Coinbase, Circle, and others trading on traditional exchanges.

Joel Kruger, analyst at LMAX Group, characterized the bounce as technically driven rather than fundamentally motivated. “The rebound reflects bearish positioning unwind and thin liquidity rather than clear fundamental catalysts,” Kruger noted, urging caution about the rally’s durability. Joshua Lim of FalconX observed that some funds are rotating capital into higher-volatility altcoins and options strategies, potentially extending the bounce.

Key Resistance Levels Define Near-Term Trajectory

The path forward hinges on whether Bitcoin can sustain moves above critical resistance zones. The $72,000 and $78,000 levels represent meaningful barriers—breaking them on a sustained basis would signal renewed structural uptrend potential rather than a temporary technical relief rally. Until then, traders should monitor correlation levels closely; another rise to 0.90+ would suggest Bitcoin and broader market indices remain tightly bound, limiting outsized crypto outperformance.

The resurging correlation between Bitcoin and equity indices underscores an essential truth: while cryptocurrency offers unique on-chain dynamics and policy tailwinds, macroeconomic gravitational forces remain powerful. For now, the window for on-chain factors to support Bitcoin appears open through mid-2025—but that window narrows if global market indices face sustained headwinds from persistent rate concerns or currency instability.