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Ahmed Barakat
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The S&P 500 blasted to a record 7,534 on Memorial Day as oil price plummeted on potential Middle East de-escalation. A tentative framework agreement between the Trump administration and Iran to reopen the Strait of Hormuz sent Brent crude tumbling back below $100 per barrel, gutting the geopolitical risk premium that had kept institutional allocators defensive for weeks.
Spot BTC ETF flows have yet to turn positive after a bloody week. Can Bitcoin take advantage of this situation? Or is the downtrend yet to bottom?
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Bitcoin S&P 500 Correlation Could be Back
The Bitcoin correlation with the S&P 500 is not just a background statistic. During prior risk-on equity waves, Bitcoin’s 90-day correlation with the S&P has repeatedly climbed into the 0.3–0.5 range, compared with near-zero or negative readings during risk-off periods.
UBS had projected the S&P 500 reaching 7,500 by year-end 2026 on the back of roughly 14% earnings growth, with approximately half of that expansion driven by AI and tech. The index hitting that target ahead of schedule compresses the forward timeline for every correlated risk asset.
Bitcoin’s price structure shows a clean reclaim of the 200-day EMA, with horizontal resistance clustered near its prior all-time high. The technical setup is not ambiguous after it reaches what looks to be a local bottom. But the question now is whether macro momentum holds long enough to push through it.
The primary variable to watch is institutional infrastructure demand, specifically whether the Nasdaq options market and spot ETF complex continue to absorb supply at current levels or begin showing outflow pressure ahead of the next macro data print.
Oil Price Collapse Is the Disinflationary Shock Crypto Has Been Waiting For
Brent crude tumbling back below $100 per barrel is not just an equity catalyst; it is a direct input into the inflation trajectory that has kept the Federal Reserve hawkish and crypto markets range-bound.
The Iran deal oil price dynamic runs a clean causal chain: lower crude means lower CPI expectations, which would likely be followed by the Fed less compelled to hold rates restrictively, dollar softens, liquidity conditions loosen, so risk assets, including Bitcoin, can reprice higher.
Brent had spent weeks above $100 following Iran’s disruption of the Strait of Hormuz, a chokepoint carrying roughly 20% of global oil supply. AAA data showed national gasoline prices at four-year highs heading into Memorial Day.
This inflation overhang had futures markets pricing in the possibility that the Fed might raise rates rather than cut, a scenario that would have been structurally brutal for crypto. The framework agreement, even unfinalized, changes that pricing.
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