Breaking Bitcoin’s Correlation With Macro

In this report we delve into the historical factors that have driven BTC returns and pose an argument that BTC could potentially detach from its macro correlation with US equities in the long-term.

Crypto Is Macro (At Least Partially)

Historically, BTC’s returns have been driven by three separate factors and, two months into 2025, it is clear how each of those factors can individually impact price-action. These three drivers are: macro, regulation, and supply and demand. In the past, these drivers have often aligned to collectively influence BTC’s price movements in a single direction.

In 2022, for example, all three worked against Bitcoin. On the supply and demand side, the supply effect of the Bitcoin halving on price had waned away by 2022, and the collapse of FTX meant consumer demand for crypto-risk was at a low. In macro, the Fed had begun its hiking cycle and, from a regulatory standpoint, the SEC levied numerous enforcement actions against the crypto industry.

In 2025, the macro environment has once again taken a slightly more hawkish turn for risk-on assets, however the remaining two factors remain significant tailwinds for Bitcoin. As such, we believe there is the potential for Bitcoin to break-away from its current correlation with equities which could suffer from the macro picture, and instead be driven by the alternative tailwinds, which we will explore in more detail through this report.

The Headwinds

The first major driver for crypto is macroeconomic conditions, as BTC emerged as a macro-sensitive asset at the onset of the Covid pandemic. Following a brief hiatus in that trend when the Fed began its hiking cycle in 2022, the correlation returned in strength with the launch of the Bitcoin Spot ETFs.

Following the brief post-election exuberance, much of December 2024 and early January 2025 saw Bitcoin lack a clear directional catalyst which in turn left it at the behest of macro drivers – persistent inflation in the US, concerns from an evolving tariff program, and uncertainty surrounding wider fiscal policy have resulted in a more hawkish Fed. Chair Powell has made it clear on several occasions that policymakers are in no rush to cut interest rates further, following 100bps of reductions since September 2024. Markets now price in one interest rate cut in September 2025, fewer than the two forecast by FOMC participants in December.

The hawkish Fed rhetoric meant that the macro drivers had turned slightly less bullish for risk-on assets as the year began. Furthermore, the past few macro events that have impacted price (the launch of DeepSeek’s LLM renewing fears of a US tech equity bubble and the official tariffs announcement on Canada, Mexico and China) have done so negatively. With many of those events occurring on weekends, BTC was the first to react, with US equities, such as the S&P 500, following suit at the market bell. BTC’s 90-day rolling correlation with the S&P 500 has been ranging at the 0.5 mark, close to its historical highest as both of the aforementioned events led to a slashing of risk-on sentiment across the board.