Ecoinometrics Warns Bitcoin at Risk if Equities Roll Over

Ecoinometrics warns that Bitcoin may drop further if tech stocks roll over, as tighter equity correlations increase downside risk.

Bitcoin may face another leg lower if U.S. equities lose momentum, according to macro research firm Ecoinometrics. In a recent post on X, the firm said BTC is no longer trading independently. Instead, it moves closely with stocks, capital flows, and broader macro conditions. With tech stocks slowing and the Federal Reserve holding steady, risks remain tilted to the downside.

Tighter Stock Correlation Leaves Bitcoin Exposed to Market Sell-Off

In a recent article, Bitcoin Macro Intelligence Ecoinometrics said BTC no longer trades in isolation. The correlation between equities and capital flows has tightened over recent years. So, instead of trading independently, BTC now behaves more like part of the broader stock market system.

The OG coin has tried to stabilize in recent weeks, but the price structure does not confirm a clear bottom. The asset remains below its 200-day moving average, and that trend line has started to slope downward. That usually signals a bear market, and there is no clear sign of recovery yet.

At the same time, the Nasdaq 100 has not yet entered a structural downtrend. Prices have been trading sideways for about 3 months, but the 200-day moving average still points higher. That means equities are slowing, but they have not broken down.

According to Ecoinometrics, that gap creates an unstable setup. Bitcoin already shows negative momentum, while equities are still holding up. If the Nasdaq rolls over and loses its long-term trend, downside pressure could increase across all risk assets.

Ecoinometrics also noted that history shows no case where tech moved into a true bear market while Bitcoin quietly held its ground. In 2022, once tech stocks entered a clear downtrend, the asset did not stay stable. Instead, it dropped along with the rest of the market.

Being “already down a lot” did not protect Bitcoin from further losses. Even though the asset had already fallen significantly, it continued to decline.

Volatility data also shows that Bitcoin behaves differently now. In earlier cycles, price swings became extreme during both rallies and crashes. Over the past cycle, those swings were more muted. Even after a full bear and recovery phase, volatility did not reach the same high levels seen in the past.

Peak volatility since late 2022 has been much lower than in previous cycles. At times, Bitcoin’s volatility even dropped below Nvidia’s. That shift reflects a change in who drives demand.

Stock Market Weakness Could Drag BTC Lower

Spot Bitcoin ETFs now play a major role in market direction. ETF flows tend to be larger and steadier than retail-driven waves seen earlier. Whale activity still affects the market, but it no longer dominates price action the way it once did.

As a result, extreme short-term moves have become less common. Long-term volatility has compressed across a full cycle. Bitcoin now behaves more like a traditional risk asset than a detached speculative trade.

More institutional investors now hold Bitcoin, which makes price moves more stable. However, it also means the asset moves more closely with stocks, especially growth and tech shares. If stocks drop sharply, BTC will likely fall too.

Some traders thought the Federal Reserve turned more aggressive after the January meeting. Ecoinometrics disagreed. The firm analyzes the Fed’s statements using a model that measures overall tone. 

Its Fed Communications Index showed the latest minutes were slightly hawkish. However, that tone has remained consistent for several meetings.

On the other hand, inflation has improved but is not fully under control. The labor market remains firm, which means rate cuts are not urgent. The Fed is in a middle position, not signaling a new tightening cycle.

For Bitcoin, a steady Fed removes the risk of a sudden policy shock. At the same time, there is no strong support for lower rates either. Ecoinometrics concluded that risk still leans lower. 

Bitcoin is already in a bear trend and closely tied to stocks. If equities weaken, the asset will likely follow suit. Until tech stocks recover or markets see a major sell-off that clears excess risk, caution makes sense.

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