Despite a continuous streak of record highs for the S&P 500 and Nasdaq in recent weeks, these gains have not supported the declining crypto prices. On Thursday, both asset classes tumbled together.

Bitcoin (BTC) has been struggling significantly over the past few months, with its price falling more than 20% since reaching a record high in mid-March. In contrast, U.S. stocks, represented by the Nasdaq Composite and the S&P 500, have been on a consistent upward trajectory.

Both of these equity indices closed in positive territory for the seventh consecutive day on Wednesday, reaching all-time highs. According to MarketWatch, this marked the 37th record close of 2024 for the S&P 500 and the 27th for the Nasdaq.

A report from The Block yesterday noted that Bitcoin’s correlations with these indices had dropped to multi-month lows – minus 0.84 with the Nasdaq and minus 0.82 with the S&P 500. (A reading of minus 1 would indicate they are moving in completely opposite directions but by the same amount.)

However, that’s not the case today. Both asset classes are moving in tandem. Unfortunately for the bulls, this means stocks have turned sharply lower. By midday in New York, the Nasdaq was down 1.8% and the S&P 500 down 0.9%. Bitcoin, which had earlier climbed above $59,000 on positive U.S. inflation news, was down 0.6% to $57,500. The broader CoinDesk 20 Index fell 0.4%.

There could be further downside for cryptocurrencies if the equity market’s bad day turns into a broader correction, said Joel Kruger, market strategist at the LMAX Group, in a morning update.

“Right now, the biggest risk we see to crypto assets is the risk that highly overbought U.S. equities could be on the verge of rolling over,” Kruger said. “The correlation isn’t absolute by any means, but there is evidence that a sharp pullback in stocks could weigh on crypto, at least temporarily.”

Source: Coindesk