Disclaimer: this article is purely based on my personal opinion.
BTC and The S&P 500 Strong Correlation
I started investing in the S&P500 since 2024 and have worked in the crypto trading industry for almost 3 years. The most popular narrative about Bitcoin around 2023-2024 is that Bitcoin functions as digital gold and serves as an inflation and US dollar hedge.
However, an article posted in Nasdaq blog aptly summarizes my observation about BTC and the S&P 500. Historically, they have exhibited strong correlations. For example,
- 2025: Trump inauguration, S&P 500 hits ATH ~6100 (^GSPC), while BTC hits ATH at ~110K
- 2024: S&P 500 increased 24%, while BTC surged 135%
- 2023: S&P 500 rose 26%, with BTC climbing 147%
- 2022: S&P 500 declined 19%, while BTC dropped 65%
This pattern suggests that investors seem to treat both assets as “risk-on” investments. Meaning, they are both classified as “risky” assets. Investors are more likely to invest in both of them during period of economic optimism, and sell both during bear markets.
BTC and The S&P 500 Divergence
In April 2025, Trump is becoming a mad lad and imposes a bunch of reciprocal tariffs on almost every country on earth. Apparently, the tariff is calculated based on US trade imbalance with the trading partner, to be exact $tariff = max( 0.1, trade deficit / us import / 2) $. I am not an economy expert by any means but this formula doesn’t make any sense. The imposed tariff implies that Trump expects US to remove any trade deficit with every trading partner. This is akin to buying coffee from your nearest supermarket, and expecting that very same supermarket to buy something from you. Of course, this is a total madness and the stock market faces intense fear.
The S&P 500 drops to ~12 months low, currently sitting at ~5070 price level as per 5/4/2025. However, interestingly, BTC price is still moving sideways, around ~82-84K price level. This shows that BTC can act as a very good hedge against bearish market condition. Even gold that is traditionally seen as a safe-haven during recession period drops 2% after Trump’s Liberation Day. However, it’s only a few days after liberation days, and I would like to observe the market closely in the coming weeks as more countries will react to Trump’s sweeping tariff, prompting great reaction from the market.
TL;DR
During Trump’s Liberation Day, BTC shows its resiliency against recessionary pressures by diverging from the S&P 500 and outperforming gold.
Edit
Two days after posting this article, BTC (and ETH) is being smacked down. It is now down 7% from the 83K level… I thought BTC can give some hopium, but it ultimately disappoints me. One hypothesis that I can think of, probably there are major liquidations and unwinding going on over the weekend, causing people to inadvertently liquidate their BTC to cover their margin calls in other positions. All in all, it still downs less than the S&P 500, so interesting observation.