The correlation between Bitcoin and traditional stock market indices varies across different market environments. In bull markets, Bitcoin often exhibits a low or negative correlation with indices like the S&P 500, acting as a hedge due to its decentralized nature and distinct investor base. However, during periods of heightened uncertainty—such as economic downturns or geopolitical crises—this correlation tends to increase, as risk-off sentiment drives synchronized sell-offs across asset classes. Data suggests that in 2022, amid rising interest rates and inflation fears, Bitcoin’s correlation with equities peaked, moving in tandem with Nasdaq declines. Conversely, in early 2023, as markets stabilized, this linkage weakened, highlighting Bitcoin’s sensitivity to macroeconomic shifts. Understanding these dynamics is crucial for portfolio diversification, as Bitcoin’s behavior reflects both its unique attributes and its growing integration into the broader financial ecosystem.