Bitcoin’s long-standing reputation for outperforming traditional assets met an unusual setback this year.
While equity markets soared on enthusiasm around artificial intelligence and corporate investment cycles, the world’s largest cryptocurrency failed to keep pace, marking its first year of underperformance against the S&P 500 since 2014.
Key Takeaways
Bitcoin is set to finish below the S&P 500 for the first time in ten years.
Strong rallies in AI stocks and metals appear to have redirected momentum away from crypto.
Technical and sentiment indicators point to diminished enthusiasm compared to earlier in the cycle.
Bloomberg’s projections indicate that U.S. stocks are heading toward gains exceeding 16 percent in 2025, whereas Bitcoin is on track to finish roughly three percent lower. This reversal breaks nearly ten years of periods where Bitcoin either outpaced or at least followed equity direction.
A Hot Start Fizzles Into a Deep Drawdown
Although Bitcoin reached fresh record highs above $126,000 early in the year, the rally proved fragile. A mix of forced liquidations, diminishing retail activity and fading momentum drove a retreat of nearly 30 percent from October’s peak, pulling prices near $88,135. The cooling is all the more puzzling given that the political backdrop — notably expectations around Donald Trump’s re-election and friendlier regulatory messaging — was assumed to be supportive rather than harmful.
Investors Found Other Trades More Exciting
Unlike in 2020 and 2021, when cheap money pushed both equities and Bitcoin sharply higher, 2025 saw speculative energy redirected elsewhere. Artificial intelligence plays dominated the risk-seeking narrative, while gold and silver began testing historical highs, attracting flows typically associated with macro hedging that previously landed in crypto.
Matt Maley of Miller Tabak + Co explained that Bitcoin’s struggle stems from losing its role as the market’s preferred momentum instrument. According to him, precious metals absorbed a portion of the capital that in earlier cycles would have rotated into Bitcoin.
The change in positioning also reflects weaker confidence inside the crypto ecosystem. ETF inflows slowed considerably after a strong start to the year, institutional announcements became far less visible and technical metrics, including shorter sequences of rising daily highs, suggested that the rally had lost internal strength rather than facing purely external pressure.
Some Analysts Say This Pullback Is More Mathematics Than Meaning
Despite the apparent divergence, not everyone views this as a structural warning sign.
Stephane Ouellette, CEO of FRNT Financial, argues that the comparison at calendar boundaries is misleading because it ignores how dominant Bitcoin was in the previous two years. The asset began 2025 so far ahead of equities that even a mild correction leaves it significantly ahead over a longer time horizon.
Ouellette emphasised that as recently as early October, Bitcoin was still comfortably outperforming the S&P 500 on a twelve-month basis. From his perspective, equities are reclaiming lost ground rather than Bitcoin fundamentally breaking down.
Looking Ahead
The story of 2025 is less about Bitcoin failing and more about market leadership rotating. Instead of monopolising speculative flows, Bitcoin is now competing with several powerful narratives — AI growth, commodity hedging and equities seeking catch-up performance. Whether capital rotates back into crypto or continues to diversify will determine the tone heading into 2026.
