By Chris Hollingworth 
Bitcoin’s price movements have shown a striking resemblance to those of the US equity market, particularly the tech-heavy Nasdaq and the benchmark S&P 500 in recent years. With fund managers now executing a historic exodus from US stocks, concerns have emerged regarding whether Bitcoin could potentially be the next asset to face the consequences.
According to Bank of America’s latest survey, investors have significantly reduced their exposure to US equities by a record 40-percentage-points between February and March. This sharp decline, termed a “bull crash,” indicates a waning belief in US economic outperformance and escalating concerns about a global economic downturn. The data also reveals that a net 69% of surveyed managers believe the peak of “US exceptionalism” has been reached, signaling a pivotal shift that could impact risk assets like Bitcoin, given their enduring positive correlation over the past 52 weeks.
A notable concern for Bitcoin and the broader crypto market stems from the increasing cash allocations by investors. The March survey by BofA shows that cash levels, often seen as a flight-to-safety indicator, rose to 4.1% from February’s 3.5%, marking the highest level since 2010. Additionally, 55% of managers highlighted “Trade war triggers global recession” as the top tail risk, while 19% expressed worries about inflation leading to Fed rate hikes – scenarios that could dampen enthusiasm for risky assets like Bitcoin.
Despite these concerns, the survey indicates that “Long crypto” remains a crowded trade at 9%, coinciding with the establishment of the Strategic Bitcoin Reserve in the US. Furthermore, 68% of managers anticipate Fed rate cuts in 2025, up from 51% in the previous month. Lower interest rates have historically aligned with gains in Bitcoin and the wider crypto market, with predictions on Polymarket suggesting a 100% certainty of this occurring before May.
Bitcoin’s price has experienced a decline of over 25% since reaching a record high of nearly $110,000 two months ago. Many view this downturn as a typical correction within a bull market, indicating a potential recovery in the near future. Notably, Bitcoin was holding above its 50-week exponential moving average (50-week EMA) at $77,250 as of March 19, a significant technical level to monitor.
Historically, Bitcoin tends to return to the 50-week EMA following strong rallies. A breach below this support level has previously signaled bear markets, as seen in the correction cycles of 2018 and 2022. Conversely, maintaining above the 50-week EMA has led to new price highs, as observed in 2024. If Bitcoin manages to bounce back from the current support level, there is a likelihood of testing the psychological resistance at $100,000.
It is important to note that this article does not offer investment advice. All investment decisions carry inherent risks, and readers are encouraged to conduct their own research before making any financial decisions.
