The S&P 500 has officially entered a correction phase, which is characterized by a 10% decline from its peak. Should a further 10% decrease occur, it would indicate the onset of a bear market. However, is there any need for alarm? Since the inception of Bitcoin in 2009, the S&P 500 has encountered numerous corrections of 20% or more.
After the global financial crisis of 2008, the index saw a nearly 60% drop. In 2019, during Bitcoin’s bearish period, the S&P 500 fell by 20%, while Bitcoin itself plummeted as much as 85% from its record high. The March 2020 crash due to COVID-19 resulted in the index declining nearly 40%, with Bitcoin losing 60% of its value. Most recently, in 2022, the index underwent a correction of 25%, while Bitcoin reached a cycle low of $15,000 one month later after sinking an additional 25%.
Historically, a 10% drop in the S&P 500 occurs frequently. Currently, Bitcoin has decreased by 30% from its record peak amid this correction. Reviewing the corrections that happen during bull markets, these kinds of decreases are normal, with the last notable 30% correction occurring in August 2024 during the unwind of the yen carry trade.