S&P 500 Hits New Milestone, Crypto Market Poised for Rebound?

Key Insights:

• The S&P 500’s recent milestone of $7,000 could be a precursor to a rally in the crypto market.
• The declining US dollar and the fixed position of the Fed regarding the rates might prompt an increase in the demand for digital currency such as Bitcoin.
• The traders of crypto are awaiting the breakout in Bitcoin since the markets are favorable to risk assets.

The S&P 500 hit a new milestone by surpassing the $7,000 mark for the first time on January 28, 2026. This increase is after the Federal Reserve resolved to maintain interest rates and optimism on economic growth.

Even though the equity markets exhibited subdued vigor, now most crypto market traders are speculating whether a similar trend will bring back the crypto prices.

The overall economic factors, such as the Fed’s attitude to interest rates and the US currency weakening, are most likely to affect the price of digital assets, such as Bitcoin (BTC) and Ethereum (ETH).

What the S&P 500 Milestone Means for the Crypto Market?

The recent surge in the S&P 500, driven by semiconductor gains and an overall positive economic outlook, has sparked optimism. Besides, it has also raised questions about the correlation between traditional equities and the crypto market.

As the Federal Reserve announced that it would stop raising rates, there is an increasing opinion that liquidity would inject risk assets, such as cryptocurrencies.

According to analysts, the weakness of the dollar will be critical in this case. Typically, as the dollar decreases, investors resort to other assets such as gold and the crypto market, considered to be stores of value.

This is a notable trend in the crypto market, and more so in Bitcoin. The crypto traders are looking forward to a good atmosphere of recovery.

Besides, they are anticipating the Fed to hold interest rates stagnant, which may represent a possible change towards more accommodative monetary policy.

In historical instances, low-interest rates and a weaker dollar have shown the tendency to increase the performance of crypto prices, as witnessed during the 2020-2021 bull run.

The Fed’s Pause and Its Implications for Bitcoin and Crypto

The most recent announcement by the Federal Reserve to maintain the federal funds rate at 3.5-3.75% was foreseen. However, the central bank’s acknowledgment that inflation remains “somewhat elevated” suggests that the market may continue to experience volatility in the coming months.

This may present a chance for Bitcoin, and the broader crypto market do better. Notably, it seems that the market moods are still positive on riskier investments.

With the inflation worry still ongoing, the investors are likely to find other options to the common investments. Having said that, the crypto prices could be one of the beneficiaries.

The decline of the US dollar has already led to the debate regarding the possibility of Bitcoin becoming a hedge against inflation.

Other analysts also say that a declining dollar may trigger the crypto prices boom once more. They also noted that this could be the best opportunity crypto investors have to place themselves in a breakout.

The Impact of the Weakened Dollar on Crypto Prices

Another major event that has attracted the interest of the crypto market traders is the further weakening of the US dollar.

The dollar has continued to fall to four-year lows after reporting its poorest performance in the last four years since 2017. This has a huge effect on the crypto market because the depreciation usually leads to a surging demand for other resources, such as Bitcoin.

Bitcoin, as an example, has always exhibited an inverse correlation with the US Dollar Index; that is, as the dollar diminishes, Bitcoin becomes stronger.

This trend is expected to persist in case the dollar keeps falling in value and increases the pressure on digital value as a store of value, and even a new market surge.

Furthermore, the hopes of a change in the US monetary policy, such as a potential subsequent reduction of rates, are also playing into a better macroeconomic environment for cryptocurrencies.

Though the chances of the rate reductions are now lower in a few recent weeks, the possibility of the expansion of a laxer monetary policy is one of the main aspects that can push the crypto market towards further profits.

What’s Next for the Crypto Market?

As the S&P 500 is soaring, Bitcoin and other crypto prices remain in a phase of consolidation. Bitcoin has not passed key resistance areas despite a recovery to the $89,500 range.

The asset price is stuck in a narrow band between $86,000 and $93,000, and traders are keen on whether there will be a breakout.

The price of Bitcoin is facing one of its biggest challenges in the form of keeping above the price of over $90,000, despite gold prices perpetually making new highs.

The failure of Bitcoin to replicate the recent boom of gold, even when the U.S. dollar is weakening, has frustrated a few crypto market traders.

Analysts are split as to whether the present movement of prices is an indication of a new bull market or whether Bitcoin will continue in its holding pattern in the meantime.

Several technical indicators are painting a mixed picture for the near-term outlook of Bitcoin price. The Relative Strength Index (RSI) is at the bullish-neutral range. It suggests that the rally may not be over soon.

However, Moving Average Convergence Divergence (MACD) indicates the decline in the momentum, and, therefore, there is a risk that Bitcoin is in a pullback instead of an upswing.