Bitcoin Drops 30% as S&P 500 Declines 6%

Bitcoin (BTC) experienced a significant drop, reaching a four-month low of $76,700 on March 11, following a 6% weekly decline in the S&P 500 index. This correction pushed the index to its lowest level in six months, as investors began to factor in higher odds of a global economic downturn. Despite Bitcoin's 30% drop from its all-time high of $109,350, several key indicators suggest that the correction may be nearing its end.

Some analysts have suggested that Bitcoin has entered a bear market. However, the current price action differs significantly from the November 2021 crash, which saw a 41% drop from $69,000 to $40,560 in just 60 days. A comparable scenario today would imply a decline to $64,400 by the end of March. The current correction mirrors the 31.5% drop from $71,940 on June 7, 2024, to $49,220 over 60 days. During the late 2021 bear market, the US dollar was strengthening against a basket of foreign currencies, as reflected in the DXY index, which surged from 92.4 in September 2021 to 96.0 by December 2021. This time, however, the DXY started 2025 at 109.2 and has since declined to 104. Traders argue that Bitcoin maintains an inverse correlation with the DXY index, as it is primarily viewed as a risk-on asset rather than a safe-haven hedge against dollar weakness. Overall, current market conditions show no signs of investors moving to cash positions, which supports Bitcoin’s price.

The Bitcoin derivatives market remains stable, with the current annualized premium on futures standing at 4.5%, despite a 19% price drop between March 2 and 11. For comparison, on June 18, 2022, this indicator fell below 0% after a sharp 44% decline from $31,350 to $17,585 in just 12 days. Similarly, the Bitcoin perpetual futures funding rate is hovering near zero, signaling balanced leverage demand between longs and shorts.