Bitcoin maintains a long-term negative correlation with the S&P 500, marking the longest decoupling phase since 2020. Previously, in October, BTC reversed sharply, falling from around $30,000, while shares continued to rise towards 5,000.
In fact, this divergence followed a major liquidation event, which wiped out approximately 70,000 BTC in Open Interest in one session, resetting positioning to April 2025 levels.
Since then Bitcoin [BTC] The trend has continued to decline under geopolitical pressure and tighter liquidity conditions. Meanwhile, the S&P 500 held its structure for months before recently bouncing back from its highs.
As this shift unfolds, sentiment in both markets is now converging to extreme fear levels.
In turn, this alignment indicates that even after being separated for a long time, general economic conditions are starting to come together again, signaling a possible shift towards a shared cautious approach in both crypto and traditional markets.
Macro pressures are driving synchronized extreme fear in crypto and stocks
The simultaneous decline in both sentiment gauges points to a broader macro reset and not isolated weakness in either market. The S&P 500 Fear and Greed Index is down to 16, while stocks are retreating from around $7,500.
At the same time, Bitcoin’s value has continued to fall to around 12, while BTC is retreating from above $100,000. In fact, this alignment is rare, as crypto and stocks usually price fear at different stages.
Previously, Bitcoin showed relative resilience.
As Nic Puckrin, co-founder of Coin Bureau, told AMBCrypto via email:
Bitcoin had risen about 8% amid geopolitical tensions, even as stock prices fell.
However, that difference is now fading. With both markets converging in extreme fear, investors appear to be broadly de-risking, indicating liquidity is tightening and macro conditions are beginning to dominate price behavior in both asset classes simultaneously.
From leverage flush to flow-driven Bitcoin price action
Bitcoin’s open interest expansion in October explains its previous divergence from equities, when leverage rose to $45 billion as the price approached $120,000.
However, this structure relied on aggressive derivatives exposure.
In fact, the liquidation of October 10–11 deleted approximately 70,000 BTC, reducing Open Interest to $30 billion and resetting market risk capacity.
As this disruption unfolded, the price fell towards $90,000, demonstrating how much demand was driven by leverage rather than on a spot basis.
In the meantime, Open interest stood at $21.8 billion at the time of writing, reflecting a more defensive positioning. This shift implies that the market has moved from speculative expansion to capital preservation.
At the same time, lower leverage reduces cascade risk, but also weakens trend strength. As a result, the price becomes more sensitive to real inflows, meaning any sustained move now requires real capital, not leverage-driven momentum.
Final summary
- Bitcoin [BTC] and the S&P 500’s convergence toward extreme fear signals the disappearance of macro-driven risks as liquidity tightens in both markets.
- Bitcoin’s deleveraging weakens momentum as the S&P 500 rolls, making both markets more dependent on real capital flows.