Gate News, March 23 — Due to escalating tensions in the Middle East, Bitcoin and stock market trends experienced significant shifts in March. Previously exhibiting independent movements, Bitcoin has now re-correlated positively with the S&P 500, indicating that macro risks are once again dominating the market.
In early March, amid ongoing US-Iran conflicts, Bitcoin outperformed gold and US stocks, sparking speculation that funds were flowing from traditional assets into the crypto market. However, in the latter part of the month, market sentiment sharply deteriorated, with the Crypto Fear & Greed Index dropping back to “Extreme Fear,” and US stock investor sentiment worsening in tandem. According to the American Association of Individual Investors (AAII), 52% of retail investors are pessimistic about the next six months, reaching a nearly one-year high.
On-chain data platform Alphractal pointed out that Bitcoin and stocks moving together is uncommon and often signals systemic pressure building up. Meanwhile, Donald Trump’s 48-hour ultimatum regarding the Strait of Hormuz continues to ferment, further amplifying geopolitical risk premiums.
From a technical perspective, analyst Tony Severino believes that when Bitcoin’s correlation with the S&P 500 shifts rapidly from negative to positive, it often marks a temporary top in the stock market, after which both asset classes may decline simultaneously. He warns that if a short-term rebound occurs, it could be a typical “dead cat bounce,” with further downside potential afterward.
Current market expectations show a decreased probability of the Federal Reserve cutting interest rates in the near term, with tightening liquidity expectations suppressing risk assets. In this context, Bitcoin’s safe-haven attributes are being questioned. If the price falls below the key support level of $68,000, the next target zone could be around $65,000.
Overall, the correlation between Bitcoin and traditional financial markets is strengthening, with macro variables once again becoming the dominant factor influencing prices. Short-term volatility risks are notably increasing.
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