Bitcoin’s rally has lost momentum since an October 2025 flash crash kicked off a prolonged downward cycle. That early shock erased roughly 19% from the then all-time high of $126,000 and set off months of steady declines punctuated by sharp drawdowns. The sell-off pushed BTC to a local low near $60,000 before the market settled into a mid-term consolidation.
Recent price action has been mildly constructive: over the past month Bitcoin posted a net gain of 4.89% and briefly traded as high as $75,000. But fresh data on the short-term correlation between Bitcoin and the S&P 500 has raised a red flag among some analysts, suggesting the apparent stabilization may be fragile.
Market technician Tony Severino (CMT) flagged the issue in an X post on March 21. He focused on the 20-day BTC–S&P 500 correlation coefficient, a measure that runs from -1 (perfect negative correlation) to +1 (perfect positive correlation), with 0 indicating no meaningful relationship. According to Severino, past market sequences where the 20-day correlation fell to about -0.5 and then snapped higher have preceded significant stock market collapses that dragged Bitcoin down with them.
During the bearish period that started in late 2025, the 20-day correlation did dip to around -0.5—an environment in which BTC fell while equities were rising. It recently bounced back to about -0.10. Severino’s thesis is that this drop-then-rebound pattern has historically been a precursor to larger corrections. He also notes that those episodes typically include an initial price bounce that lasts about 10–17 weeks before the more severe drawdown begins; the current rebound that began in early February would be roughly eight weeks old under that framework.
Looking at precedent, Severino points to similar setups in 2018, 2020 and 2022 that preceded sharp corrections. If history repeats, the implied downside from the peak of the initial bounce could be severe—on the order of a 70–80% fall in those past instances—though exact outcomes will depend on the broader macro backdrop and market liquidity at the time.
At the time of writing Bitcoin is trading around $68,584, down about 2.41% over 24 hours. Daily trading volume has also dropped roughly 41.21%, a sign of waning participation as BTC consolidates following a failed breakout above $75,000 last week.
Bottom line: the near-term technicals show a modest recovery, but a resurfacing correlation signal with equities has some technicians warning that a larger correction could be lurking. Traders should weigh the historical precedents Severino highlights while watching volume, correlation dynamics and broader macro indicators for confirmation.
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