The relationship between cryptocurrencies and the S&P 500 is complex and not always consistent, despite periods of positive correlation. While recent data shows the S&P 500 rising (e.g., up 18% year-to-date in 2025, with SPY at $662.29 as of September 22, 2025), and some cryptocurrencies experiencing declines (e.g., Bitcoin down ~20% over the past month), this divergence doesn’t necessarily signal an imminent downturn for the S&P 500. However over the long term Bitcoin and the S&P 500 tend to move up and down at the same time. For example Bitcoin is up 24% year-to-date. The overall picture is that cryptocurrencies are correlated with the S&P 500 and when the correlation changes it is a warning that something is about to change.
Cryptocurrencies are influenced by factors beyond equity markets, such as regulatory developments, technological updates, or market-specific events (e.g., the 2020 SushiSwap controversy or Bithumb’s chairman arrest). These can cause crypto prices to diverge from the S&P 500 without reflecting broader market trends. However, both S&P 500 and Bitcoin are influenced by interest rates, they both tend to go up when the Federal Reserve cut interest rates.
The S&P 500’s recent gains align with positive economic signals, like the Federal Reserve’s 50-basis-point rate cut in September 2024, boosting risk assets. Bitcoin also rallied 100% since September 6, 2024, its higher volatility means it can swing more dramatically, even in opposite directions. More recently the Fed cut interest rates (last week) and the S&P 500 rallied to new highs but Bitcoin is going down. That is unusual and a warning that something is changing. What has changed is the Fed becoming dovish at the end of an Elliott wave. Markets have rallied in five waves since April, at the end of an impulse wave I see the divergence as a confirmation signal. The stock market is likely to correct to catch up with Bitcoin.