Bitcoin (CRYPTO: BTC) has failed to participate in the S&P 500’s climb to fresh all-time highs, with analysts warning that historical midterm-year patterns could still produce a late-summer or fall equity correction that drags cryptocurrency prices lower. While U.S. equities continue to set records, experts caution that the divergence in performance may signal an impending risk-off environment for digital assets later this year.

Fed Policy and Market Timing

In a podcast on Aug. 5, analyst Benjamin Cowen noted that the S&P 500’s advance to roughly 7,750 remains consistent with previous U.S. midterm election years. Historically, equities have continued setting records through August or September before entering meaningful corrections. Cowen believes the stock market could remain bullish for several more weeks but expects the risk of a correction to increase from mid-August through September.

The Federal Reserve’s Sept. 16 meeting is highlighted as a possible catalyst for such a shift. A rate hike could pressure risk assets by signaling the end of the previous easing cycle. Conversely, keeping rates unchanged could create volatility if inflation remains elevated and long-term Treasury yields continue climbing. Continued strength in the U.S. dollar could also create additional headwinds for stocks and cryptocurrencies.

Bitcoin Cycle Dynamics

Cowen is primarily watching the S&P 500 to estimate when Bitcoin could establish its market-cycle bottom. He noted that Bitcoin historically reached its final bear-market low during the second major equity correction of previous midterm years. In 2018, Bitcoin held support near $6,000 for most of the year but broke down after the stock market entered its second correction, eventually falling roughly 48% even though the S&P 500 traded only moderately below its earlier yearly low.

Cowen believes a similar, though potentially less volatile, structure could be developing in 2026. A deeper S&P 500 decline could force Bitcoin to lose its support around $60,000 and establish a final cycle low later this year.

Technical Outlook for Crypto Assets

Analyst Trader Mayne argued in a separate podcast that crypto’s next bull market has not yet been confirmed, despite improving risk sentiment and record equity prices. Bitcoin has remained inside an approximately $10,000 range for nearly two months and continues to test a descending trendline.

A decisive breakout could send BTC toward $67,000 to $70,000. However, Mayne wants to see a sustained high-timeframe close above those levels before treating the move as a genuine trend reversal. Failure to break the downtrend could return Bitcoin to range lows. Even a 20% to 30% rally would not necessarily confirm that the bottom is in, as the move could still establish another lower high before a final decline. Mayne expects investors may receive additional opportunities to accumulate BTC during September and October, consistent with his interpretation of the four-year cycle.

What the Numbers Show

The lack of sustained progress among major cryptocurrencies contrasts sharply with U.S. equities reaching record highs. This divergence suggests that traditional risk-on sentiment is not uniformly translating into crypto asset appreciation. The persistence of Bitcoin within a narrow $10,000 range while equities hit new peaks indicates that crypto markets are currently decoupled from broader equity momentum, waiting for confirmation of a trend reversal rather than participating in speculative rallies.

The S&P 500 broke above its 200-week moving average against Bitcoin on Tuesday, ending a 14-year streak of cryptocurrency outperforming stocks. This technical crossover marks the first instance since 2012 where equities have surpassed Bitcoin in relative performance, signaling a potential shift in asset class dominance.

Market Dynamics Shift

The same crossover pattern appeared in the Nasdaq-to-Bitcoin ratio, a development that has never occurred in the history of both assets, according to CoinDesk. The ratio has favored Bitcoin since 2010, but today’s reading stood at roughly 0.12 BTC to buy the S&P 500, a significant decline from more than 300 BTC in 2012. Unlike previous instances where stocks briefly outperformed Bitcoin before reversing, this break has been sustained.

CoinDesk noted that this sustained break suggests Bitcoin’s era of outsized gains versus equities may be fading. This undercuts both the superior store of value narrative and aggressive price targets from prior cycles. A more constructive interpretation is that Bitcoin is maturing; moonshot rallies are typical for small, illiquid assets, but at a trillion-dollar market cap with ETFs, options, and futures, it is harder to move as it once did.

Equity Rally Drivers

The S&P 500 crossed 7,700 for the first time on Tuesday, pushing the total market cap above $70 trillion. The Nasdaq, Dow, and Russell 2000 all hit fresh highs in the same session, according to Trader Mayne, founder of Breakout Prop, during The Order Book Show livestream. Mayne linked part of the rally to the forced unwinding of Leopold Aschenbrenner’s Situational Awareness fund.

Bitcoin’s Current Position

Bitcoin has traded inside a roughly $10,000 range for close to two months while equities push to record highs. Mayne interprets this dislocation as evidence that the crypto bull cycle has not yet started. He stated he is waiting for a confirmed technical breakout before turning bullish, with $70,000 as his first upside target.

What the Numbers Show

The divergence between equity momentum and Bitcoin’s consolidation highlights a structural change in risk appetite. While equities benefit from forced unwinding of specific funds and broad index gains, Bitcoin remains range-bound despite its trillion-dollar valuation. This suggests that liquidity flows are currently favoring traditional markets over digital assets, potentially delaying the next phase of Bitcoin’s price appreciation until a clear technical breakout occurs.

Rate expectations are also shifting, with Fed rate hike odds for December moving from above 60% probability of no change toward roughly 43%, according to Polymarket and CME data referenced by Mayne. Separately, reported US intervention to support the Japanese yen raised concerns about a yen carry trade unwind that could pressure US interest rates higher.