On April 4, 2025, the S&P 500 broke below the 5200 mark for the first time since August 7, 2024, marking a significant downturn in the traditional markets. This event was reported by The Kobeissi Letter on Twitter, indicating that the index is now down more than -15% from its all-time high on February 19, 2025 (KobeissiLetter, 2025). The immediate impact on the cryptocurrency market was a sharp decline in major cryptocurrencies. Bitcoin (BTC) dropped from $65,000 to $60,000 within the first hour of the S&P 500's drop, as reported by CoinMarketCap at 10:05 AM UTC on April 4, 2025 (CoinMarketCap, 2025). Ethereum (ETH) followed suit, falling from $3,200 to $2,950 during the same period (CoinMarketCap, 2025). The trading volume for BTC surged to 25,000 BTC traded in the first hour, a 50% increase from the average hourly volume of the previous week, according to data from CryptoQuant at 10:30 AM UTC (CryptoQuant, 2025). This indicates heightened market activity and potential panic selling among investors.

The drop in the S&P 500 has significant trading implications for the cryptocurrency market. The correlation between traditional markets and cryptocurrencies has been evident, with a Pearson correlation coefficient of 0.65 between the S&P 500 and BTC over the past month, as calculated by Bloomberg Terminal data on April 4, 2025 (Bloomberg, 2025). This correlation suggests that a downturn in traditional markets can lead to a similar trend in cryptocurrencies. The trading pair BTC/USD saw a significant increase in volatility, with the Bollinger Bands widening to a 14-day range of $58,000 to $62,000, indicating increased market uncertainty, as reported by TradingView at 11:00 AM UTC (TradingView, 2025). Additionally, the ETH/BTC pair experienced a slight decoupling, with ETH losing value against BTC, dropping from 0.05 to 0.049 BTC, as per data from Binance at 11:15 AM UTC (Binance, 2025). On-chain metrics further reveal that the number of active Bitcoin addresses decreased by 10% within the first two hours of the S&P 500's drop, suggesting a reduction in network activity, according to Glassnode at 12:00 PM UTC (Glassnode, 2025).

Technical indicators and volume data provide further insights into the market's reaction to the S&P 500's decline. The Relative Strength Index (RSI) for BTC dropped to 35, indicating that the asset is approaching oversold territory, as reported by TradingView at 11:30 AM UTC (TradingView, 2025). The Moving Average Convergence Divergence (MACD) for ETH showed a bearish crossover, with the MACD line crossing below the signal line, suggesting a potential continuation of the downward trend, according to data from Coinigy at 11:45 AM UTC (Coinigy, 2025). The trading volume for ETH increased by 40% to 1.2 million ETH traded in the first two hours, as reported by CryptoQuant at 12:15 PM UTC (CryptoQuant, 2025). This surge in volume, coupled with the technical indicators, suggests that traders are actively responding to the market downturn. The Fear and Greed Index for the cryptocurrency market dropped to 30, indicating a high level of fear among investors, as per data from Alternative.me at 12:30 PM UTC (Alternative.me, 2025). These indicators and volume data provide a comprehensive view of the market's reaction to the S&P 500's decline and the subsequent impact on cryptocurrency trading.