Veteran strategist Ed Yardeni has increased his forecast for a potential Bitcoin could face deeper downside as odds of U.S. stock market crash this year to 35%, citing rising oil prices, a strengthening dollar, and escalating geopolitical tensions in the Middle East, particularly the expansion of the Iran conflict into Saudi Arabia. These macroeconomic pressures could create ripple effects across global financial markets, including cryptocurrencies.
Bitcoin Holds Ground Amid Volatility
Despite sharp declines in global equities and heightened market volatility, Bitcoin is holding steady around $67,000, showing resilience in the face of mounting macroeconomic pressures. Analysts, however, warn that the largest cryptocurrency could see further downside if the U.S. market enters a meltdown scenario.
Other major cryptocurrencies have also shown mixed but generally stable performance:
- Ether (ETH): $1,981, up 2.3%
- BNB: $624, up 1.4%
- Dogecoin (DOGE): $0.09, up 1.8%
- Solana (SOL): $83.69, up 1.8% but down 1.5% weekly
- XRP: $1.35, flat
Meanwhile, S&P 500 futures fell more than 2% in Asian trading, the VIX volatility index surged to its highest level since last April, oil prices climbed above $100, and the U.S. dollar recorded its steepest weekly gain in a year.
Ed Yardeni Raises Meltdown Probability
Ed Yardeni, a veteran market strategist, increased the probability of a U.S. market meltdown to 35%, up from 20%, while lowering the odds of a “melt-up” scenario to just 5%.
"The U.S. economy and stock market are stuck between Iran and a hard place," Yardeni wrote.
"If the oil shock persists, the Fed's dual mandate will be challenged by the increasing risk of higher inflation and rising unemployment."A market meltdown would likely drive investors away from risk assets toward safer investments like Treasuries, cash, and the U.S. dollar, potentially impacting Bitcoin, which has historically fallen alongside equities during major risk-off episodes despite its reputation as a hedge.
Bitcoin’s Correlation with Equities
Research from NYDIG shows that Bitcoin’s price movements are only partially explained by its correlation with U.S. equities. Greg Cipolaro, NYDIG’s head of research, notes that:
- About 25% of Bitcoin’s price action is linked to equities.
- The remaining 75% is driven by crypto-specific factors, such as network activity, adoption trends, and market sentiment.
Cipolaro also explained that Bitcoin’s recent movement alongside software stocks is more reflective of shared exposure to macroeconomic factors rather than structural convergence with equities.
Broader Market Context
Global equities remain under pressure:
- MSCI’s global equity index fell 3.7% last week, with Asia being hit hardest.
- South Korea has yet to recover from its record two-day plunge.
- Hedge funds are increasing short positions in U.S. equity ETFs.
- Benchmark 10-year Treasury yields rose six basis points as markets anticipate higher inflation due to the oil shock.
The U.S. has fared slightly better, thanks in part to its energy self-sufficiency, but the 2% drop in S&P 500 futures on Monday suggests that this buffer is shrinking.
Read More: Why Japan’s Nikkei 225 Can Stage A Minor Recovery After Its 4-Day Plunge
FAQs
Why is Bitcoin holding up despite stock market volatility?
Bitcoin’s price is influenced by both macroeconomic factors and crypto-specific fundamentals. While equities are under pressure, Bitcoin’s adoption trends, network activity, and investor sentiment help buffer it from full correlation with stocks.
How does rising oil prices affect Bitcoin?
Rising oil prices can lead to higher inflation and potentially slower economic growth. During such periods, risk assets, including Bitcoin, may face selling pressure as investors move toward safer assets like cash or Treasuries.
What does a 35% probability of a U.S. market meltdown mean?
Ed Yardeni estimates that there is roughly a one-in-three chance that the U.S. stock market could experience a significant crash this year, largely driven by geopolitical risks and macroeconomic pressures such as rising oil prices and inflation.
Is Bitcoin a safe hedge against market crashes?
Historically, Bitcoin has not been entirely immune to risk-off episodes. During major market sell-offs since 2020, it has tended to fall alongside equities rather than act as a guaranteed safe haven.
Should investors be worried about the dollar and Treasury yields?
A stronger dollar and rising Treasury yields generally indicate risk-off sentiment. Investors seeking safety might shift funds away from volatile assets like cryptocurrencies, potentially putting downward pressure on prices.
Conclusion
Bitcoin’s resilience in the current market shows that it is not strictly tethered to equities, but macroeconomic headwindsn including rising oil prices, geopolitical risks, and potential U.S. market turmoilpose a real threat. While the cryptocurrency has demonstrated stability around $67,000, investors should remain cautious. Diversification, risk management, and awareness of both crypto-specific and macroeconomic factors will be key for navigating potential market turbulence in 2026.
