Bitcoin could face deeper downside as odds of U.S. market meltdown rise to 35%

Bitcoin is holding up better than it probably should.

The largest cryptocurrency traded at $67,378 on Monday morning, up 1.1% over the past 24 hours and essentially flat on the week, while the world around it deteriorated sharply.

Among majors, ether rose 2.3% to $1,981, hovering just below $2,000. BNB gained 1.4% to $624. Dogecoin added 1.8% to $0.09. Solana climbed 1.8% to $83.69 but remains down 1.5% on the week, still the weakest major over a seven-day basis. XRP was flat at $1.35, down 1% on the week.

S&P 500 futures fell more than 2% in Asian trading. The VIX surged to its highest level since April's tariff turmoil. Oil is above $100. The dollar just posted its steepest weekly gain in a year.

Meanwhile, veteran strategist Ed Yardeni raised the probability of a U.S. market meltdown to 35%, up from 20%, while slashing the odds of a melt-up to just 5%.

"The US economy and stock market are stuck between Iran and a hard place," Yardeni wrote. "If the oil shock persists, the Fed's dual mandate would be stuck between the increasing risk of higher inflation and rising unemployment."

In meltdown conditions, risk assets across the board tend to suffer as investors pull capital from anything with volatility and move into cash, Treasuries, or the dollar. Bitcoin has historically not been immune to that dynamic, falling alongside equities during every major risk-off episode since 2020 despite its reputation as a hedge.

Elsewhere, NYDIG's head of research Greg Cipolaro offered a framework for understanding bitcoin's price action compared to U.S. stocks in a Friday note.

Cipolaro argued that bitcoin's recent parallel movement with U.S. software stocks reflects "shared exposure to the current macro regime" rather than structural convergence.

Statistically, only about 25% of bitcoin's price movements are explained by correlation to equities. The other 75% is driven by factors outside traditional stock indices, he said.

The broader equity picture remains grim. MSCI's global equity gauge fell 3.7% last week, with Asia bearing the worst of it. South Korea has still not fully recovered from its record two-day plunge. Hedge funds have been boosting short positions in U.S. equity ETFs. Benchmark 10-year Treasury yields jumped six basis points as traders priced in higher inflation from the oil shock.

The U.S. has fared better than most on the equity side, with the S&P 500 down only 2% last week, partly because American energy self-sufficiency insulates it more than Asian or European markets.

But the 2% drop in futures on Monday suggests that the buffer is thinning.