"Bitcoin Price Drop to $75K: Is This the Bottom?"

Is $75K the Bottom for Bitcoin Price?

On April 6, Bitcoin (BTC) dropped below $75,000 due to pressure from traditional markets, with S&P 500 futures hitting their lowest levels since January 2024. This initial panic also caused WTI oil futures to plummet below $60 for the first time in four years. However, markets later recovered, allowing Bitcoin to reclaim the $78,000 level.

Bitcoin's Correlation with Traditional Markets

Despite some analysts suggesting that Bitcoin has entered a bear market after a 30% price correction from its cycle peak, historical data shows numerous examples of stronger recoveries. Bitcoin's high correlation with traditional markets tends to be short-lived, with traders waiting for better entry opportunities.

40-day correlation: S&P 500 futures vs. Bitcoin/USD. Source: TradingView / Cointelegraph

Bitcoin's recent performance has closely followed the S&P 500, but this correlation fluctuates significantly over time. The recent price drop reflects the heightened uncertainty in traditional markets, with major tech stocks currently trading down by 30% or more from their all-time highs.

Gold's Troubles as a "Store of Value"

Despite its $1.5 trillion market capitalization, Bitcoin remains one of the top 10 tradable assets globally. Gold, often seen as the only reliable "store of value," saw its volatility highlighted between 2022 and 2024 when it took three years to recover its previous all-time high after dropping to $1,615.

The gap in spot exchange-traded fund (ETF) assets under management is relatively narrow, with $330 billion for gold compared to $92 billion for Bitcoin. The introduction of Bitcoin-listed instruments like the Grayscale Bitcoin Trust (GBTC) in 2015 gave gold a 12-year head start.

Bitcoin ETFs and Derivatives

Bitcoin perpetual futures (inverse swaps) remain strong, with the funding rate near zero, indicating balanced leverage demand between longs and shorts. A recent $412 million liquidation of leveraged long positions was relatively modest, suggesting traders were better prepared this time or relied less on leverage.

Bitcoin perpetual futures 8-hour funding rate. Source: Laevitas.ch

The stablecoin demand in China provides further insight, with a 1% premium for USD Tether (USDT) on April 7 indicating investors may be shifting positions to stablecoins, waiting for confirmation that the US stock market has bottomed before returning to cryptocurrency investments.

Conclusion

Historically, Bitcoin has shown a lack of correlation with the S&P 500. The near-zero BTC futures funding rate, modest futures liquidations, and stablecoin premium in China suggest that Bitcoin may have found a bottom at $75,000.

This article is for general information purposes and is not intended to be, and should not be taken as, legal or investment advice. The views expressed here are solely the author's and do not necessarily reflect those of Cointelegraph.