Bitcoin May See Further Losses as Chances of a U.S. Market Meltdown Climb to 35%

Global markets are facing mounting pressure as geopolitical tensions escalate and energy prices surge, though Bitcoin has so far shown surprising resilience.

The largest cryptocurrency was trading at around $67,378 on Monday morning, up 1.1% over the past 24 hours and largely unchanged over the past week, even as broader financial markets experienced increasing volatility.

Among other major digital assets, Ether climbed 2.3% to $1,981, hovering just below the $2,000 mark. BNB gained 1.4% to $624, while Dogecoin rose 1.8% to $0.09. Solana advanced 1.8% to $83.69, though it remains down 1.5% over the past week, making it the weakest performer among major tokens during that period. XRP traded flat near $1.35, leaving it about 1% lower on a weekly basis.

Meanwhile, traditional markets are showing clear signs of stress. Futures tied to the S&P 500 dropped more than 2% during Asian trading hours, while the CBOE Volatility Index surged to its highest level since the tariff-driven turmoil seen in April. Oil prices have pushed above $100 per barrel, and the U.S. dollar has recorded its strongest weekly performance in roughly a year.

Against this backdrop, veteran market strategist Ed Yardeni raised his estimate for the probability of a U.S. market meltdown this year to 35%, up from 20%, while reducing the likelihood of a market “melt-up” to just 5%.

“The U.S. economy and stock market are stuck between Iran and a hard place,” Yardeni wrote, warning that if elevated oil prices persist, the Federal Reserve could face a difficult balancing act between rising inflation and growing unemployment risks.

Historically, severe risk-off environments tend to hurt most volatile assets. During periods of market stress, investors often rotate into safer holdings such as cash, U.S. Treasuries, or the dollar. Despite its reputation as a hedge, bitcoin has typically moved alongside equities during major risk-off episodes since 2020.

Still, analysts suggest bitcoin’s relationship with stocks may be more nuanced. In a recent research note, Greg Cipolaro explained that bitcoin’s recent tendency to move alongside U.S. software stocks likely reflects shared exposure to the current macroeconomic environment rather than a fundamental structural link.

According to Cipolaro, statistical analysis shows that only about 25% of bitcoin’s price movements can be explained by its correlation with equities, while roughly 75% is driven by factors outside traditional stock market dynamics.

The broader outlook for equities remains fragile. A global equity gauge compiled by MSCI fell 3.7% last week, with Asian markets taking the biggest hit. South Korean stocks are still recovering from a historic two-day plunge, while hedge funds have been increasing short positions in U.S. equity ETFs. At the same time, benchmark 10-year U.S. Treasury yields climbed six basis points as traders priced in the inflationary impact of rising oil prices.

U.S. equities have held up somewhat better than other regions so far. The S&P 500 declined about 2% last week, partly because the country’s relative energy independence offers more insulation from oil shocks compared with Asian and European markets.

However, the sharp drop in stock futures at the start of the week suggests that advantage may be fading.