Bitcoin correlation with S&P 500 weakens as index falls below 2,000

Correlation with S&P 500 weakens

According to McGlone, the crypto market has started a broad deflationary phase, potentially pulling Bitcoin down to its long-term historical average near the $10,000 mark. The core of his pessimistic outlook is the breakdown in the correlation that investors have monitored for years.

McGlone observed that the longstanding relationship between Bitcoin and equities has weakened, arguing that this rupture increases the risk of a deeper correction in the market.

Bitcoin was previously priced as a high-risk asset, closely tracking global liquidity and equity markets. However, this dynamic appears to have decoupled. On May 29, the Bloomberg Galaxy Crypto Index—a key sector indicator—dropped below 2,000 points, losing half its value compared to its 2025 peak.

Mini glossary: The Bloomberg Galaxy Crypto Index tracks the general direction of the cryptocurrency market by aggregating the performance of major digital assets and serves as a barometer for broad sector trends.

Comparisons to 2018 and market criticism

McGlone compares the current climate to the 2018 cycle, when Bitcoin suffered prolonged losses and found support near $3,000. He points out that, unlike 2018, Bitcoin now operates in a far broader universe of digital assets. The proliferation of millions of tokens and the fragmentation of capital adds significant pressure, with the report arguing that U.S. dollar-backed stablecoins have maintained their function more clearly during the turmoil.

On the other hand, some industry professionals deem McGlone’s approach overly mechanical. Skeptics highlight his previous bearish forecasts that did not materialize and suggest that he underestimates shifts in market structure and the emergence of new sources of capital.

ETF influence and pivotal levels

A major counterargument to the $10,000 scenario centers on the institutional framework established by the launch of spot Bitcoin ETFs from firms like BlackRock and Fidelity. While such large-scale funds did not exist in previous cycles—such as 2018 or 2022—they now provide billions of dollars in price support and serve as a floor for the market.

The report also notes that the recent drop in the Bloomberg Galaxy Crypto Index mostly reflects weakness in speculative altcoins. Historically, Bitcoin’s market dominance often grows during periods of turmoil, and the index’s steep decline may not signal a crash of the same scale for Bitcoin itself.

Even so, McGlone acknowledges that his scenario is not absolute. He identifies the $75,000 mark as a key threshold; should Bitcoin recover and hold above this level, the bearish expectations would be invalidated and the divergence from the S&P 500 could be viewed as mere market noise rather than a structural shift.