3 REASONS WHY BITCOIN PRICE COULD CRASH IF US STOCK MARKET COLLAPSES

The crypto world, often perceived as a decentralized haven, isn't entirely immune to the tides of traditional finance. Crypto and stock prices have surged this year, driven by strong earnings and central banks lowering interest rates. Bitcoin reached a record high of nearly $105,000, while the total cryptocurrency market cap increased by 120%. U.S. stock indices like the Nasdaq 100, Dow Jones, and S P 500 have also risen by over 20%.Bitcoin, the king of cryptocurrencies, has shown a growing correlation with the U.S. stock market. The bitcoin price has dropped under $100,000 per bitcoin, down from an all-time high of almost $110,000 ahead of U.S. president Donald Trump's inauguration (despite the chief executive of majorThis connection raises a crucial question: what happens to Bitcoin if the stock market takes a nosedive? BTC Crash Concerns. Besides, A recent report from The Kobeissi Letter hints at a potential BTC crash by $20,000 in the coming few weeks. The report noted Bitcoin s relation with the global monetary supply, saying that if the crypto continues to move in tandem, it could see a massive dip ahead.While Bitcoin bulls maintain its status as a safe haven, historical data and market dynamics suggest a potential for significant price drops.This isn't about doomsday predictions; it's about understanding the interconnectedness of global markets and preparing for potential turbulence. Three reasons suggest that the Bitcoin price crash could be coming to an end: technicals, short-term holder behavior, and whale accumulation. The value area low of $90.9k is a strong support level, where 68% of the trading volume occurred between November 11 and December 11. Bitcoin whales haveThe 2025 pandemic crash vividly demonstrated this interconnectedness, and recent market behavior suggests history could repeat itself.Several factors are contributing to the fear that the stock market might be heading for a correction, or worse, a full-blown crash. 3 Reasons Why Bitcoin Crash is Likely. Bitcoin price is consolidating below the 2025 ATH for the sixth consecutive month. Generally, consolidation below a key hurdle is bullish. In this case, the Relative Strength Index (RSI) hovers above the 50 mean level after descending from the overbought conditions, signaling a bearish outlook.Rising bond yields, persistent inflation, and a weakening US consumer are all warning signs flashing red.So, what are the specific reasons why Bitcoin could mirror a stock market crash? In the first week of May, the U.S. Federal Reserve opted to hold its benchmark interest rate at a range of 4.25% to 4.5%, which is largely what economists had anticipated.This article will delve into three key factors that could trigger a significant downturn in Bitcoin's price if the U.S. stock market collapses, helping you navigate the potentially choppy waters ahead.

1.Correlation Between Bitcoin and the Stock Market

Historically, Bitcoin was touted as an uncorrelated asset, a safe haven like gold, offering refuge during economic uncertainty.However, in recent years, this narrative has been challenged. A breakdown below the $102,900 support could shift the high-timeframe market structure to bearish. Bitcoin s 30-day implied volatility has fallen to an 11-month low, signaling reduced price movement expectations. CME futures and options open interest have declined sharply, reflecting weak participation from sophisticated traders.Especially since the 2025 pandemic, Bitcoin's price movements have increasingly mirrored those of major stock indices like the S&P 500 and Nasdaq.This correlation means that when investors become risk-averse and start selling off stocks, they are also likely to reduce their exposure to Bitcoin. BTC/USDT daily price chart. Three reasons why Bitcoin is crashing. Bitcoin s 2025 bull run was kicked off by the approval of US-based spot Bitcoin Exchange Traded Funds (ETFs). The catalystBut why has this correlation emerged?

Institutional Investment and Mainstream Adoption

One major factor is the increasing institutional investment in Bitcoin.The approval of US-based spot Bitcoin Exchange Traded Funds (ETFs) in 2025 was a pivotal moment.These ETFs made it easier for institutional investors and traditional financial institutions to allocate capital to Bitcoin.As a result, Bitcoin has become more integrated into traditional investment portfolios. Reason Behind Bitcoin Price Crash On Decem, Mt. Gox was reported to have distributed $100 million worth of Bitcoin. The report indicates that the firm transferred this substantial amount of BTC to three different wallet addresses, each receiving $30.18 million worth of Bitcoin.When institutional investors rebalance their portfolios during a stock market downturn, they often reduce their holdings across the board, including Bitcoin.

Furthermore, mainstream adoption of Bitcoin has also contributed to this correlation. The damage, of course, is real. More than $1 trillion was erased from the seven largest U.S. companies on Monday alone. Crypto, a proxy for investors appetite for brainless risk, has plunged toAs more retail investors participate in the crypto market, their behavior tends to align with that of stock market participants. Bitcoin has fallen below $90,000, marking its lowest point since mid-November, as a massive crypto selloff shakes the market. The drop follows Donald Trumps trade tariffs, rising ETF outflows, and a $1.5 billion hack at Bybit. Major cryptocurrencies like Ether, XRP, and Solana are also down sharply. Over $1.34 billion in bullish positions were liquidated, while investors pulled $956 millionFear and panic selling, common during market downturns, can exacerbate price drops in both stocks and Bitcoin.

Example: During the initial phase of the coronavirus pandemic in March 2025, both the stock market and Bitcoin experienced significant crashes. A strong rejection here could crash ETH down by 9% to $3,701, which is the first key support level. If the selling pressure is not satiated at this point, Ether could slide lower to retest the previous monthly Value Area High (VAH) or the weekly Volume-Weighted Average Price (VWAP) at $3.518.This event served as a stark reminder of the potential for correlation during times of global economic stress.Even after the pandemic, the correlation remained elevated, suggesting a fundamental shift in market dynamics.

It's crucial to remember that correlation doesn't imply causation. The prices of Bitcoin and other major cryptocurrencies plunged over the last two days, mirroring the volatility in global stock markets and ending a run of growth and excitement in the cryptoBitcoin's price is influenced by many factors, and the correlation with the stock market can fluctuate. At 4 a.m. ET, Bitcoin s decline dragged the total crypto market cap down 9.6% to $3.01 trillion. In the past 24 hours alone, Bitcoin has dropped 7%, wiping out more than $230 billion from theHowever, the observed trend suggests that a significant stock market correction could have a negative impact on Bitcoin's price.

2.Risk-Off Sentiment and Liquidity Crunch

A stock market crash often triggers a ""risk-off"" sentiment across all asset classes. The latest price moves in bitcoin (BTC) and crypto markets in context for . First Mover is CoinDesk s daily newsletter that contextualizes the latest actions in the crypto markets.Investors become more risk-averse and seek safer investments like government bonds or cash. Bitcoin has plunged under $80,000 per bitcoin as a crypto rout that s wiped $1 trillion from the combined market gathers pace, fueling fears of more pain to come.This shift in sentiment can lead to a liquidity crunch, where investors rush to sell assets to raise cash.A liquidity crunch can severely impact Bitcoin's price.

The Impact of Margin Calls and Leverage

Margin calls can amplify the effects of a risk-off environment. Bitcoin took a brutal fall on Monday, briefly dipping below $30,000 for the first time since July 2025. The world s largest cryptocurrency is now worth less than half of what it was in the fallMany investors use leverage (borrowed money) to increase their potential gains in both the stock market and the crypto market.If the stock market crashes, investors may receive margin calls, requiring them to deposit additional funds to cover their losses. A stock market crash occurs when a broad market index, like the S P 500 or Dow Jones Industrial Average, undergoes a sudden and severe drop, typically 10% or more over a few days.To meet these margin calls, investors might be forced to sell off their Bitcoin holdings, further driving down the price.

Moreover, the CME futures and options open interest have declined sharply, reflecting weak participation from sophisticated traders.This indicates reduced confidence in Bitcoin's short-term prospects and makes it more vulnerable to price drops during a market downturn. Stock markets are wobbling too, with the US S P 500 now in a bear market (down 20% from its recent high). As a result, even the big investors are less free with their money.When sophisticated traders are less active, the market becomes more susceptible to fear-driven selling pressure.

The Role of Stablecoins and Crypto Market Liquidity

The overall liquidity of the crypto market also plays a critical role.Stablecoins like USDT and USDC are used to facilitate trading within the crypto ecosystem.A sudden decrease in stablecoin market capitalization or increased regulatory scrutiny can reduce liquidity and exacerbate price volatility. Stock market data coverage from CNN. View US markets, world markets, after hours trading, quotes, and other important stock market activity.During a stock market crash, investors may redeem their stablecoins for fiat currency, further draining liquidity from the crypto market and putting downward pressure on Bitcoin's price.

Example: In the past, regulatory concerns around stablecoins have triggered significant price drops in Bitcoin.A similar event occurring during a stock market crash could amplify the negative impact and lead to a more severe decline.

Therefore, a stock market crash could trigger a risk-off sentiment, leading to margin calls, reduced liquidity, and ultimately, a significant drop in Bitcoin's price.Monitoring stablecoin market capitalization and regulatory developments is essential to assess the potential impact of a liquidity crunch on Bitcoin.

3.Macroeconomic Factors and Global Monetary Supply

Bitcoin's price is increasingly influenced by macroeconomic factors and global monetary policy. There are two key reasons why Bitcoin could, once again, decouple from stocks and avoid the effects associated with a stock market crash. Bitcoin halving. One of the most significant factors that could decouple Bitcoin price from stocks is a shock to supply. Approximately, every 4 years, the number of Bitcoin block rewards is halved.Factors like inflation, interest rates, and quantitative easing/tightening can have a significant impact on investor sentiment and risk appetite.A stock market crash often reflects underlying macroeconomic problems, which can further affect Bitcoin.

The Influence of Inflation and Interest Rates

Rising inflation and interest rates can negatively affect both the stock market and Bitcoin.When inflation rises, central banks typically raise interest rates to combat it.Higher interest rates make borrowing more expensive, which can slow down economic growth and reduce corporate earnings. 07/04 update: The bitcoin price and crypto market has suffered a major crash over the last 24 hours, with the bitcoin price diving well under $60,000 and wiping $200 billion from the combinedThis can lead to a stock market correction. Bitcoin drops below $90K for the first time since November. Unsurprisingly, the crypto that is getting the most headlines today is Bitcoin, which as of the time of this writing currently sits atHigher interest rates also make alternative investments like bonds more attractive, reducing the demand for riskier assets like Bitcoin.

Furthermore, the U.S.Federal Reserve's monetary policy plays a critical role.If the Fed continues to raise interest rates or implement quantitative tightening measures, it could further dampen investor sentiment and increase the likelihood of a stock market crash, potentially dragging Bitcoin down with it.

The Correlation with Global Monetary Supply

A recent report from The Kobeissi Letter hinted at a potential BTC crash, highlighting Bitcoin's relationship with the global monetary supply.The report suggested that if Bitcoin continues to move in tandem with the global monetary supply, it could see a massive dip ahead. 3 Reasons Why Bitcoin Price Could Crash if US Stock Market Collapses Experts are anticipating a stock market crash in the near term. Bitcoin may follow suit due to three main factors.A contraction in the global monetary supply, often associated with economic downturns, could negatively impact Bitcoin's price.

The Impact of Geopolitical Events

Geopolitical events and global uncertainties can also contribute to a stock market crash and negatively affect Bitcoin. Bear market No. 1: Bitcoin crash from $32 to $0.01 in 2025 The Bitcoin price broke its first major psychological mark of $1 back in late April Bear market No. 3: Bitcoin plunges belowTrade wars, political instability, and international conflicts can create uncertainty and reduce investor confidence. Since the 2025 pandemic crash, Bitcoin s price behavior has undergone a major shift. 5 reasons why Bitcoin started behaving like a Big Tech stock During market stress, Bitcoin oftenA stock market crash triggered by geopolitical events could lead investors to seek safer assets, further diminishing demand for Bitcoin.

Example: Donald Trump's trade tariffs in the past caused market volatility.Similarly, renewed trade tensions or unexpected geopolitical shocks could trigger a stock market crash and negatively impact Bitcoin.

In conclusion, macroeconomic factors, including inflation, interest rates, monetary policy, and geopolitical events, can all contribute to a stock market crash and indirectly impact Bitcoin's price.Staying informed about these macroeconomic trends is vital for understanding the potential risks facing Bitcoin.

Factors That Could Decouple Bitcoin from Stocks

Despite the risks outlined above, some factors could potentially decouple Bitcoin from the stock market and mitigate the impact of a crash.These include:

• Bitcoin Halving: Approximately every four years, the number of Bitcoin block rewards is halved, reducing the supply of new Bitcoins entering the market. The bitcoin price has dropped back from its recent all-time high of over $70,000 per bitcoin. Forbes Digital Assets. Earlier this year, Bank of America analysts warned the U.S. debt load is aboutThis supply shock can increase Bitcoin's scarcity and potentially drive up its price, even during a stock market downturn.The reduced supply could act as a buffer against downward pressure.
• Increased Adoption and Utility: Continued adoption of Bitcoin as a payment method or store of value could increase its intrinsic value and reduce its reliance on traditional markets.If Bitcoin becomes more widely used for real-world transactions, its price may become less correlated with the stock market.
• Safe Haven Demand: In certain scenarios, Bitcoin could act as a true safe haven asset, attracting investors fleeing from traditional markets. Market events. Crypto often crashes in tandem with global markets. When the coronavirus pandemic throttled global markets in March 2025, bitcoin crashed with it.This is more likely to occur if the stock market crash is caused by factors that don't directly impact Bitcoin, such as concerns about the banking system or currency devaluation.

Recent Market Observations and Warnings

Recent market data presents a mixed picture. A sudden price collapse has seen bitcoin fall to its lowest level since November, triggering a broader downturn that has wiped nearly half a trillion dollars from the crypto market in recent daysBitcoin's 30-day implied volatility has fallen to an 11-month low, signaling reduced price movement expectations.However, this can be a double-edged sword.While it suggests stability, it also means that the market might be underestimating potential risks. Crypto Market Crash: Bitcoin Price Suffers Before US CPI Data Release. On the US-China tariff deal, the Bitcoin price surpassed the $105k mark, and the rest of the altcoins also witnessed a significant uptrend. However, that all came crashing down as the BTC plummeted to a low of $100.7k, wiping out all the gains of the recent rally.Some analysts have noted that a breakdown below the $90,900 support level could shift the high-timeframe market structure to bearish, potentially leading to further price declines.

Furthermore, the Mt. If stocks continue to drop below key levels, the price of Bitcoin could also see a downtrend based on its reaction to the abrupt drop in the U.S. stock market. After the stock market dropped offGox situation continues to loom over the market. There are three reasons the stock market looks like it will tumble at least 10%, Peter Tchir from Academy Securities said. Rising bond yields, sticky inflation, and a weakening US consumer haveThe distribution of substantial amounts of Bitcoin from Mt.Gox could create selling pressure and negatively impact the price, particularly during a period of market uncertainty.

Strategies to Mitigate Risk

Given the potential risks, what can investors do to mitigate the impact of a stock market crash on their Bitcoin holdings? In the crypto market, bitcoin dropped below $50,000 ( 39,000) for the first time since February, while Ethereum (ETH) saw its value fall more than $1,000 in a matter of days, down from $3,300 atHere are some actionable strategies:

1. Diversification: Don't put all your eggs in one basket.Diversify your investment portfolio across different asset classes to reduce overall risk.
2. Risk Management: Use stop-loss orders to limit potential losses.Determine your risk tolerance and set appropriate stop-loss levels.
3. Dollar-Cost Averaging (DCA): Invest a fixed amount of money at regular intervals, regardless of the price.This can help reduce the impact of price volatility.
4. Stay Informed: Keep up-to-date with market news, macroeconomic trends, and regulatory developments.Knowledge is power.
5. Consider Cold Storage: For long-term holdings, consider storing your Bitcoin in a cold wallet (offline) to protect against hacking and theft.

Conclusion: Navigating the Potential Storm

While Bitcoin holds immense potential, it's crucial to acknowledge its interconnectedness with the global financial system, particularly the U.S. stock market.The three reasons outlined – the growing correlation between Bitcoin and stocks, risk-off sentiment leading to liquidity crunches, and the influence of macroeconomic factors – highlight the potential for a significant Bitcoin price crash if the stock market collapses.It is important to remember that the crypto market can experience extreme price volatility.While Bitcoin is currently trading around $104,402, it has experienced large percentage drops in short periods.This means that Bitcoin investors should be prepared to experience volatility and significant drops in the short term. Crypto Market Crash: Reasons Why Bitcoin, ETH, XRP Altcoins Falling Sharply. Bitcoin price today currently trades at $98K, down 7% in the last few hours. Other the other hand, ETH price has tumbled to $3000 and XRP corrects 12% to $2.78. The crypto market crash sees no signs of slowing as experts predicted further dropdown in prices. 1.Understanding these factors and implementing appropriate risk management strategies is essential for navigating the potentially choppy waters ahead.Remember, knowledge is your greatest asset in the volatile world of cryptocurrency.By staying informed and prepared, you can better protect your investments and weather any potential storms.