S&P 500 Hits All-Time High Bitcoin Surges 40%

Both the S&P 500 and Bitcoin have experienced a significant recovery since April. The S&P 500 ended the week at 6,173, marking its return to all-time-high territory for the first time since February. Meanwhile, the tech-heavy Nasdaq 100 reached unprecedented levels earlier in the week. This surge was partly driven by crypto-focused stocks, with Coinbase accelerating by 40% in the space of a month and closing at a record-breaking $369.21 on Friday. Strategy’s share price, however, rose by only 3% over the past month, indicating a waning investor enthusiasm for Michael Saylor’s Bitcoin treasury model.

The correlation between Bitcoin’s price and the S&P 500 is currently at 0.47, suggesting a relationship between stocks and cryptocurrencies. This indicates that Bitcoin is being driven by macroeconomic factors and broader market sentiment rather than interest in the digital asset itself. When Bitcoin decouples from equities, its price movements are often driven by its intrinsic fundamentals, such as its fixed supply, adoption cycles, and halving events.

Analysts note that the S&P 500’s rebound from a dramatic slump in April, where it plunged below 5,000 points and risked entering bear market territory, happened remarkably quickly. This rapid recovery suggests that traders are no longer fearful about how tariffs could affect the global economy. There are also signs that tensions between key trading partners are beginning to thaw, with the U.S. and China reaching a new deal that will make it easier for American firms to acquire rare earth minerals and magnets.

Inflation continues to be a concern for consumers and corporations alike, with fears that tariffs on a host of imported goods could soon feed through into the data. The Federal Reserve’s target has long been 2%, but figures continue to show inflation is stubbornly higher than this. This has left Fed chair Jerome Powell reluctant to cut interest rates, with most policymakers in the Federal Open Markets Committee indicating they’ll be held once again at the end of July. Another hold would undoubtedly irritate the U.S. president, who has repeatedly called for Powell to resign and suggested that interest rates should be much lower.

There are two schools of thought regarding whether the S&P 500 will continue to rise. One perspective, based on historical data, suggests that when this index hits a new all-time high after coming out of a bear market or correction, further gains tend to follow. Tracking seven previous instances, average returns after three months stood at 0.4%, rising to 6.6% after six months, and 13.1% after a year. However, another measurement by the Carson Group’s chief market strategist Ryan Detrick looks a little gloomier. He found that when there’s a four to 12-month gap between all-time highs, forward returns are quite muted. The S&P 500 hasn’t hit a new high in more than four months, but that could end any day now.

Just like it’s impossible to predict Bitcoin’s price movements, take any S&P 500 forecasts you see with a generous pinch of salt. The current political climate means literally anything can happen. The relationship between the S&P 500 and Bitcoin is complex, with both assets influenced by macroeconomic factors and broader market sentiment. As the S&P 500 continues to rise, it remains to be seen whether this will have a positive impact on Bitcoin. However, it is clear that the two assets are closely linked, and developments on Wall Street will continue to have a significant impact on the crypto markets.