Sluggish price action has been most evident across digital assets, while equities have managed to remain modestly bullish.
Still, this dynamic may not persist. Incoming U.S. economic activity data could influence capital rotation, potentially altering Bitcoin’s price trajectory in the months ahead.
Housing data could impact Bitcoin
Housing Starts—a leading economic indicator that tracks new residential construction—alongside other macro data, suggests that a potential shift in market conditions may be forming.
This outlook stems from the ongoing decline in Housing Starts.
Historically, periods of declining housing activity have often preceded changes in monetary policy expectations and liquidity conditions, which can ultimately support equities, particularly the S&P 500.
Conversely, rising Housing Starts have at times coincided with tighter financial conditions.
Bitcoin [BTC] and the S&P 500 have frequently moved in the same direction during liquidity-driven or risk-on phases, even though the strength of this relationship varies across market regimes.
At press time, Housing Starts continued to trend lower, a signal that has historically aligned with improving conditions for equities over time.
João Wedson has pointed to this development as a constructive signal for risk assets, while emphasizing that the timing of any market reaction remains uncertain.
“This is one of those leading indicators that tends to move before the S&P 500 reacts — although it can take months or even years to fully reflect in prices.”
This suggests that while a broader rally could emerge, the impact may unfold over an extended period rather than immediately.
As such, any meaningful upside response could materialize well into 2026, depending on how liquidity and economic conditions evolve.
Equities and Bitcoin correlation
The relevance of these macro signals becomes clearer when examining the longer-term relationship between equities, the S&P 500, and Bitcoin.
An analysis of annual returns for both assets between 2012 and 2024 shows that there have been only two notable instances where their performance diverged meaningfully.
In most years, both markets moved in the same general direction, despite differences in magnitude and volatility.
In 2014, Bitcoin declined by roughly 50%, while the S&P 500 gained about 29%. Similarly, in 2018, Bitcoin fell by 72%, while the S&P 500 posted a marginal annual return of approximately 0.15%.
A consistent pattern emerges from this data. When both markets decline, Bitcoin typically experiences deeper drawdowns than the S&P 500.
Conversely, when risk appetite improves and markets rally, Bitcoin has historically delivered stronger upside performance. This year alone, Bitcoin is down 32%, while the S&P 500 is up around 5.8% on a year-to-date basis.
This relationship highlights how improved liquidity conditions could eventually support Bitcoin, as well as altcoins, which have suffered similar drawdowns in recent weeks.
Other economic factors to consider
Housing data also aligns with expectations tied to the ongoing rise in global M2 money supply.
An increase in global M2 reflects a growing pool of capital across major economies that can be readily converted into cash. Currently, global liquidity stands at approximately $147 trillion.
However, rising liquidity alone is not sufficient to drive asset prices higher. Capital must actively rotate into risk assets, supported by improving financial conditions and risk-adjusted sentiment.
Until that rotation occurs, Bitcoin is likely to remain in a consolidation phase, trading within the $85,000 to $90,000 range.
At the same time, the Financial Stress Index remains slightly bearish, as it continues to sit in negative territory.
Historically, negative readings on this index have coincided with periods when speculative assets such as Bitcoin trade near the lower end of their range.
Until these macro indicators begin to converge — through improving liquidity, reduced financial stress, and stronger risk appetite — Bitcoin is likely to remain range-bound, with price action constrained to the lower end of its recent trading zone.
Final Thoughts
- Recent housing market data points to a potential shift in capital flows toward equities such as the S&P 500.
- S&P 500 is an asset class that has historically shown periods of strong correlation with Bitcoin, particularly during liquidity-driven market cycles.
