Recently, there has been an interesting phenomenon—the increasing correlation between the US stock market and cryptocurrencies. After the Venezuela incident, the S&P E-mini rose by 0.1%, Dow futures gained 7 points, and at the same time, Bitcoin also increased by 0.2% to $91,452. Behind these seemingly subtle numbers, there actually reflects a significant shift in institutional capital allocation logic.

In the past, Bitcoin was regarded as an "alternative asset" with low correlation to the traditional financial system. However, with the launch of spot ETFs and rising institutional holdings, its pricing logic has gradually been dominated by macro risk appetite. The data is clear—the 90-day rolling correlation coefficient between BTC and the S&P 500 has surged to 0.68, a new high for 2024; the correlation with Nasdaq has even reached 0.72.

What does this mean? When the stock market falls, cryptocurrencies tend to fall as well; when the stock market rises, cryptocurrencies tend to rise too. Opportunities and risks coexist. The good news is that the wealth effect during stock market rallies can spill over into the crypto space; the bad news is that the independence of the crypto market has significantly decreased, making it harder to serve as a "hedge."

Historical backtesting shows that when the S&P 500 has a single-day increase of over 1%, the probability that BTC will rise the next day is as high as 73%, with an average increase of 1.8%. Conversely, when the daily decline exceeds 1%, the probability that BTC will fall the next day is 67%, with an average decline of 2.3%. This correlation is quite stable.

If the US stock market remains strong in Q1, coupled with improved liquidity and expectations of rate cuts, the crypto market is likely to initiate a rebound rally, with BTC potentially reaching $100,000 and ETH aiming for $3,500. However, if the stock market weakens, stop-loss levels should be carefully maintained—below $89,000 for BTC and below $3,000 for ETH.