- Bitcoin has risen by 0.54% over the past day.
- The king coin has maintained its strong correlation with the U.S. stock market
Over the past year, Bitcoin [BTC] has experienced significant growth, hiking from $38k to $109k.
Such a considerable development has attracted institutional investors, with traditional financial markets embracing Bitcoin as a valuable asset.
This institutional interest has resulted in an increased correlation between BTC and the U.S. stock market.
Bitcoin strongly correlates with the U.S. stock market
According to CryptoQuant, Bitcoin has remained closely tied to the performance of the U.S. stock market.
For instance, in 2024, BTC and Nasdaq showed a historically strong correlation which has currently reached historical levels.
Source: CryptoQuant
A similar trend can be observed with the S&P 500, although there are instances they have decoupled.
For example, on the 4th of August 2024, when the U.S. stock market crashed, BTC also dropped to $49k. In November, following the election, BTC and the stock market has a strong rally.
Source: CryptoQuant
The increase in correlation indicates that institutional investors now perceive Bitcoin as a traditional asset. This market perception has aligned its performance with the overall stock market.
Significantly, with Trump now in office, and the crypto market expecting eased regulations, such as the rescinded SAB 121, BTC could now become widely accepted as an asset class among institutional players.
This recognition will, in turn, accelerate BTC adoption and growth.
What does it mean for BTC?
With Bitcoin showing sustained growth and increased acceptance among institutional investors, the king coin is well-positioned for further growth.
Therefore, with the U.S. stock market still experiencing stability and continued growth, BTC will continue making gains.
Source: CryptoQuant
We can see these future prospects as Bitcoin’s stock-to-flow reversion remained above 1 at press time. Although it had declined, it remained at 2.11, suggesting that investors were still bullish and were pricing at higher levels.
Thus, while the decline suggests cooling, the BTC is far from a bear market signal at this level.
Source: Charts.Bitbo
Additionally, Bitcoin’s Sharpe ratio has remained above 1 over the past five months, suggesting that Bitcoin is offering returns that are considerably higher than its risk.
This makes it a very attractive investment on a risk-adjusted basis.
At this level, the Sharpe ratio reflects strong confidence among investors, which incentivizes other players to enter the market.
Source: Charts.Bitbo
Finally, Bitcoin’s VDD multiple has signaled market maturity, with the metric currently remaining above 1. As such, the crypto’s network is mature, and not all coins require frequent movement to sustain high valuations.
This suggests market confidence in the long-term potential for BTC. These market conditions align with traditional market setups, making BTC attractive to more institutional players.
In conclusion, with Bitcoin positioning itself as an attractive asset for institutional investors, we could see BTC continue to make more gains.
Read Bitcoin’s [BTC] Price Prediction 2025–2026
Therefore, if the prevailing market conditions hold, BTC will reach $107k and make a new high since there’s no significant resistance above here.
However, with slight corrections becoming part of this uptrend, a pullback will see a drop to $102k.
