New developments in the Iran conflict have spread fear across both the crypto and stock markets. This shift has caused Bitcoin to lose its previous outperformance over equities.
The correlation between Bitcoin and stocks returned in March. This change has sparked new speculation among analysts.
From Outperformance to Fear: Bitcoin and Stocks Slide Together
During the first half of March, as the US–Israel–Iran conflict unfolded, Bitcoin significantly outperformed both gold and equities. This performance fueled speculation that a major capital rotation might be underway.
However, in the final week of March, sentiment indicators show that both markets have fallen into extreme fear territory. The Crypto Fear & Greed Index has returned to “extreme fear.” A similar index in the stock market has also dropped sharply.
Alphractal, an on-chain crypto data platform, considers this a rare signal and warns investors to remain cautious. Such convergence often signals broader market stress.
⚠️Fear & Greed Index returns to extreme fear in crypto.
At the same time, the stock market Fear & Greed Index has also dropped sharply, reflecting the current volatility across global markets.
It’s not common to see extreme fear in both crypto and equities aligning at the same… pic.twitter.com/vYnTCgFBVq
— Alphractal (@Alphractal) March 21, 2026
According to The Kobeissi Letter, an AAII survey shows that 52.0% of retail investors hold a bearish outlook for the next six months. This marks the highest level since May 2025.
These shifts stem from multiple factors. Donald Trump’s 48-hour ultimatum regarding the Strait of Hormuz continues to count down. At the same time, expectations for rate cuts have disappeared globally. Markets are now pricing in a small probability that the Federal Reserve could raise interest rates.
Analyst Tony Severino (CMT) notes that historical data show a pattern. When the correlation between Bitcoin and the S&P 500 drops to -0.5 and then sharply reverses upward, it often signals an impending stock market crash. Bitcoin typically follows with a steep decline.
The correlation has now moved above zero and turned positive. This shift suggests that both assets may continue moving in sync in the coming weeks. Combined with the negative sentiment, any rebound could resemble a “dead cat bounce.”
“Usually there’s a bounce first to add to the pain,” Tony Severino predicted.
These latest developments may force analysts and investors to reassess the previous narrative. Bitcoin may not act as a safe haven during wartime as previously expected.
BeInCrypto’s latest short-term analysis suggests that Bitcoin could fall toward $65,000 if the $68,000 level breaks.
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