For years, bitcoin was viewed as an uncorrelated investment, but recent events have shown it now trades similarly to other risky assets. Following US President Donald Trump’s tariff announcement on April 2, bitcoin plummeted from $84,600 to $75,000 within a week, mirroring declines in US stocks, particularly technology stocks. This drop was part of a larger selloff that began in February, with bitcoin shedding 10.5% during the week after Trump’s tariff announcement, closely aligning with the 11.6% loss in the S&P 500 and 12.0% in the Nasdaq 100.
Experts attribute this shift to bitcoin’s growing institutionalization and its evolving role as a macro-sensitive asset. Adrian Fritz, head of research at 21Shares, notes that institutional investors now treat bitcoin similarly to tech stocks, creating synchronized trading patterns during macroeconomic events. “Bitcoin’s heightened correlation with the Nasdaq and S&P 500 reflects its evolving role as a macro-sensitive asset, driven by institutional behavior and policy shifts,” Fritz explains.
Bitcoin’s Correlation with Traditional Markets
The cryptocurrency’s correlation with traditional markets became apparent during Trump’s tariff announcements. When tariffs sparked a global flight to safety, investors rapidly exited both equities and bitcoin, triggering parallel 15% declines in BTC, the Nasdaq, and the S&P 500. Conversely, when news broke of a 90-day suspension of the tariffs, bitcoin surged 8.2% on April 9, in line with a 9.5% rally in the S&P 500. Dovile Silenskyte, WisdomTree digital assets research director, describes this as a “classic macro-driven relief rally, showing just how plugged-in bitcoin is to the broader market narrative.”
Reduced Volatility Despite Recent Swings
Despite recent price swings, data suggests that bitcoin has become less volatile over time. Silenskyte points out that “over the past five years, bitcoin’s 90-day annualized volatility has been cut nearly in half, from 95% in March 2021 to 52% in March 2025.” This reduction in volatility is attributed to bitcoin’s growing institutionalization, driven by the development of regulated financial instruments such as spot bitcoin ETFs, options contracts, and volatility-linked derivatives.
Future Outlook
Looking ahead, experts expect both volatility and opportunity in bitcoin prices. Silenskyte advises that “macro liquidity remains the single most powerful force in markets and bitcoin is no exception.” Ferdinando Ametrano, managing director of CheckSig, predicts that bitcoin can reach new records in the next 12-18 months as it consolidates its role in diversified investment portfolios, though he notes that price fluctuations will be inevitable.
As the cryptocurrency market continues to evolve, the influence of institutional investors and macroeconomic factors will likely remain significant drivers of bitcoin’s price movements. With the introduction of favorable regulations and growing institutional participation, the stage is set for continued volatility and potential growth in the bitcoin market.
