Crypto Bulls Frustrated as Bitcoin and Stocks Recouple – to the Downside

A continuing series of record highs for the S&P 500 and Nasdaq over the past weeks has done nothing to prop up sliding crypto prices, but Thursday saw both asset classes tumbling together.

Bitcoin and major U.S. stock indexes fell together on Thursday, as the surprising resilience of both asset classes to each other's price movements appeared to come to an end.

After hitting a record high in mid-March, bitcoin has fallen more than 20% as U.S. stocks – as measured by the Nasdaq Composite and the S&P 500 – have continued to rise.

Both of those averages closed in the green for the seventh consecutive day on Wednesday, with both hitting all-time highs. For the S&P 500, it was its 37th record close of 2024 and for the Nasdaq, its 27th, according to MarketWatch.

A report yesterday in The Block noted that bitcoin’s correlations with those gauges had fallen to multi-month lows – to minus 0.84 with the Nasdaq and minus 0.82 with the S&P 500. (A reading of minus 1 would mean they're moving essentially the same amount but in opposite directions.)

But unfortunately for the bulls, that's not the case today. They're all moving in lockstep. At midday New York time, the Nasdaq is lower by 1.8% and the S&P 500 by 0.9%. Bitcoin, which earlier in the session climbed above $59,000 on welcome U.S. inflation news, is now lower by 0.6% to $57,500. The broader CoinDesk 20 Index is down 0.4%.

There could be further downside for cryptocurrencies if the equity market's bad day turns into a broader correction, Joel Kruger, market strategist at the LMAX Group, said in a morning update.

"Right now, the biggest risk we see to crypto assets is the risk that highly overbought U.S. equities could be on the verge of rolling over," Kruger said. "The correlation isn’t absolute by any means, but there is evidence that would suggest a sharp pullback in stocks could weigh on crypto, at least for a moment."

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