Bitcoin fails to rally as macroeconomics and correlation with stocks outweigh crypto reserve tailwinds

Bitcoin (BTC) struggled to gain momentum on Friday despite optimistic speculation surrounding the White House Crypto Summit and the establishment of a Strategic Bitcoin Reserve. Several experts pointed out that the increasing ties between cryptocurrency, macroeconomics and stock markets could significantly impede any upward trend in the market.

Crypto market down as correlation with stocks weigh on prices

The crypto market is down over 4% on Friday, with Bitcoin and several top altcoins yet to recover from the recent market decline. Bitcoin declined below $87K following the inaugural White House Crypto Summit.

The decline comes amid excitement surrounding the creation of a Bitcoin Strategic Reserve and hopes for a positive regulatory environment for crypto in the US.

The crypto market's decline could be traced to its rising correlation to the traditional stock market, which has been on a downtrend since mid-February. The Nasdaq-100 and S&P 500 have declined by 9% and 6% from their respective all-time highs on February 19, per Google Finance data.

"The crypto markets have been correlated to TradFi markets for some time. The macro forces now are so strong that no amount of good news for crypto is likely to overcome the overall sentiment," Eli Cohen, General Counsel at Centrifuge, told FXStreet.

Mike Marshall, Head of Research at Amberdata, echoed a similar sentiment in a note to FXStreet, stating that investors are showing a preference for low-risk assets.

"Bitcoin is under pressure due to challenging macro conditions - inflation steady at about 2.5%, 10-year Treasury yields ranging from 4.4% to 5% and tariff threats and uncertainty means safer assets are drawing investor interest," wrote Marshall.

Mike Cahill, CEO of Douro Labs, also shared in an interview with FXStreet that macroeconomic conditions could render a Bitcoin strategic reserve ineffective in driving the crypto market.

"Investors have to balance optimism around crypto-friendly policy with their fears of a global recession in 2025," said Cahill.

"The 30-day correlation between Bitcoin and the S&P 500 often exceeds 70%, showing a strong link between these assets despite the potential benefits of a strategic reserve. This reserve is unlikely to exert any immediate buy pressure on the market since Trump has indicated that it would be funded using already confiscated BTC rather than new purchases," Cahill added.

Furthermore, altcoins connected to the digital asset stockpile, including Ether (ETH), XRP and ADA, declined by 3%, 7% and 9% in the past 24 hours.

This follows a statement from AI and Crypto Czar David Sacks, suggesting that President Trump tipped XRP, SOL and ADA as part of the crypto reserve because they are among the top five assets.

"Well, the president just mentioned the top five cryptocurrencies by market cap, so I think people are reading into this a little bit too much," Sacks told Bloomberg TV on Friday.

However, Sacks's statement was met with opposition from crypto community members, who responded by highlighting that Ether and BNB rank higher than SOL and ADA.

Trump signed an executive order on Thursday for the creation of a Bitcoin Strategic Reserve using assets obtained from "criminal or civil assets forfeiture." The order also includes the creation of a digital asset stockpile leveraging assets gotten under similar conditions to that of the Bitcoin Strategic Reserve.