Equity markets are beginning to align with bitcoin’s earlier drop toward $60,000, suggesting that weakness is spreading across risk assets.

Bitcoin started the year with a sharp sell-off, declining significantly while stocks held near highs. That divergence is now fading, as equities come under pressure from rising bond yields.

Bitcoin slid from roughly $90,000 to nearly $60,000 within the first five weeks of the year, according to CoinDesk data. At the same time, the S&P 500 and Nasdaq Composite remained close to record levels, underscoring a clear disconnect between crypto and traditional markets.

Investors had debated whether bitcoin would rebound or if stocks would eventually reflect similar weakness. Current trends indicate that equities are now catching down to crypto’s earlier losses.

Since the beginning of the Iran war on Feb. 28, renewed inflation concerns and reduced expectations for Federal Reserve rate cuts have pushed U.S. Treasury yields higher, weighing on stock valuations.

The lag in equity market weakness highlights bitcoin’s role as a potential leading indicator for broader risk sentiment. Traders frequently watch BTC for early signals, particularly during weekends or when traditional markets are closed.

Higher yields pressure stocks

The 10-year U.S. Treasury yield climbed to 4.41%, its highest since early August, rising 48 basis points since the conflict began. The two-year yield also surged 57 basis points to 3.94%.

Treasuries serve as the benchmark for global borrowing costs, influencing interest rates on corporate bonds, mortgages and consumer loans. As yields increase, borrowing becomes more expensive, tightening financial conditions and reducing appetite for risk assets like equities.

This shift is now visible in futures markets. Nasdaq futures fell to 23,890 early Monday, the lowest level since September, while S&P 500 e-mini futures dropped to 6,505, also marking multi-month lows.

CoinDesk analysis has pointed out that major stock indices are beginning to resemble bitcoin’s price pattern ahead of its earlier crash, raising the possibility of further downside if the trend continues.

Mike McGlone of Bloomberg said bitcoin’s earlier decline could be signaling the start of a broader pullback across risk assets.

Bitcoin steadies, caution remains

After its steep early-year fall, bitcoin has stabilized, trading between $65,000 and $75,000 in recent weeks. At the time of writing, it was around $68,790.

However, derivatives markets continue to reflect caution. Options data shows strong demand for protective put contracts, indicating that traders remain positioned for potential further downside.