Bitcoin (CRYPTO: BTC) is back above $66,000 on renewed ETF inflows, with on-chain data suggesting the asset may have meaningful upside if correlations normalize.
BTC Has Room To Grow
Bitcoin has historically traded in close alignment with the S&P 500, typically rising during periods of low interest rates and economic strength, such as 2021 and 2024, and falling during risk-off environments like 2018 and 2022.
Data from Santiment show that in November 2022, aggressive rate hikes and the collapse of FTX pushed Bitcoin down to $15,700, significantly underperforming equities at the time.
Over the past six months, however, that correlation has weakened.
Gold has climbed 51%, the S&P 500 is up 7%, while Bitcoin has dropped 43%, marking its weakest correlation with equities since late 2022.
Rather than tracking traditional markets, Bitcoin has sharply lagged even as broader benchmarks remained stable.
Historically, such dislocations have not lasted.
Market rotations and shifting capital flows tend to restore correlations over time.
If Bitcoin begins to track equities again during a potential economic expansion, particularly if rate cuts materialize in late 2025, the cryptocurrency could have substantial ground to recover.
A Sentiment Boost
Santiment data show Bitcoin rebounded to $66,200 early Tuesday, gaining momentum after President Donald Trump’s State of the Union address.
Social media data across X, Reddit and Telegram indicate the highest bullish-to-bearish commentary ratio in four weeks, reflecting improving sentiment.
However, analysts caution that from a contrarian perspective, a degree of retail profit-taking would be healthier for the rally’s sustainability.
If fear of missing out intensifies and a strong consensus form that “the bear cycle is ending,” the move could stall, given retail traders’ history of mistiming major crypto inflection points.
Image: Shutterstock