Analysis of historical S&P 500 performance in U.S. presidential cycles since Bill Clinton’s second to Donald Trump’s second showed intriguing dynamics.
It starts with a decline followed by another drop in Bush’s first term during the Dot-Com Bust.
During George Bush’s second term it rose before dropping again.
Obama’s first term encountered financial crisis but recovered; his second term saw 50% rise.
During Trump’s first term, it rose 70%, dropping in 2020 but recovered soon after.
Biden’s term saw it rise 20%, the highest of 2024. Since Donald Trump resumed office on January 20, 2025, financial markets have been restless.
The S&P 500 declined 9% from its all-time high of 6, the worst start to a presidency since 2009, when the Great Financial Crisis fueled a steep recession-driven decline.
When it happened, the S&P 500 dropped over 20% in Obama’s first two months in office as the economy struggled with a banking meltdown.
But today the culprit is not outright recession but uncertaintyis driving the market.
Trump’s trade-war tactics, budget standoffs, and refusal to rule out economic recession—clarified by stating, “I hate to predict things like that”—spooked investors.
The Dow Jones Industrial Average also shed 890 points while the Nasdaq Composite tumbled 4%, reflecting a broad risk-off sentiment.
If Donald Trump’s policies, such as tax cuts or deregulation, catch up, markets will stabilize and recover by the end of 2025, potentially driving the S&P 500 to near 6,500, as Morgan Stanley predicts.
If, however, trade wars persist or GDP falls (such as the 2.8% decline forecast by the Atlanta Fed in Q1 2025), the drop would be deeper, and the index might drop below 5,000, a 16% deeper plunge.
Strategic Crypto Reserve Rally and BTC-SPX 500 Correlation
The announcement of an early March 2025 Strategic Bitcoin Reserve (SBR) caused a fleeting crypto rally.
Bitcoin (BTC) briefly reached $90,000, Ethereum (ETH) to $2,025, and altcoins like Cardano (ADA), Solana (SOL), and XRP rose as high as 9%. This too has faded away.
However, BTC has fallen alongside other cryptos. In spite of its safe-haven tag, Bitcoin’s correlation with the S&P 500—at an estimated 0.6 by analysts—has tied it to equity downturns.
Hype over hopes of an instantaneous market rally fueled the initial rush, but short-term enthusiasm could not weather widespread risk aversion.
The SBR, set to own 103,500 BTC when it launches, was intended to add legitimacy to crypto, but recession jitters and tariff risk have relegated its influence to the background.
If clarity emerges for SBR adoption by May 5, 2025, as K33 analysts speculate, then BTC could rebound to $100,000 levels. But persistent equity weakness can drive it to yearly lows.
Crypto News: Historical Highlights of Key Market Downturns
Despite this rocky start, historical S&P 500 data offered a sobering perspective: downturns were often temporary.
Placing the current volatility into perspective entails viewing historic S&P 500 crashes.
The Dot-Com Bubble between 2000 and 2002 suffered a 49% decline as technology shares crumbled.
The 2007-2009 Great Financial Crisis reduced 57% of the index value to a low point at 666 in March 2009.
Over decades, the index has trended upward, climbing nearly 70% during Trump’s first term (2017-2021) despite the 2020 COVID-19 crash.
The March 2020 COVID-19 Crash was then followed by a 34% plunge in weeks but was quickly overcome by a Fed-led recovery with S&P 500 soaring 114% as of 2022.
The Post-2009 Boom, fueled by low interest and tech sector growth, was derailed by 2022 inflation, but no crisis crash ensued.
Recent decline is tiny relative to these, which suggests vigor—unless Donald Trump’s policies drive the economy into recession.
