Bitcoin has broken from its long-standing correlation with equities, marking its first full-year divergence from stocks in over a decade.
The shift highlights a growing disconnect between crypto and traditional markets, raising questions about Bitcoin’s role in the current cycle.
A Historic Market Decoupling
Bitcoin and stocks have historically moved in tandem. However, that relationship appears to have fractured.
According to Bloomberg data, the S&P 500 has climbed more than 16% this year while Bitcoin is down 3%, marking the first such split since 2014.
Such a clean break is unusual even by crypto standards, prompting renewed scrutiny of Bitcoin’s role within global markets. The divergence challenges expectations that regulatory optimism and institutional participation would automatically translate into sustained performance.
It is especially striking given the broader environment, where artificial intelligence stocks are soaring, capital spending is accelerating, and investors are pouring back into equities. At the same time, traditional defensive assets are attracting attention, suggesting investors are reallocating rather than broadly embracing risk.
Crypto-specific pressures, including forced liquidations and a sharp decline in retail participation, have materially exacerbated Bitcoin’s underperformance. Billions of unwound positions have amplified downside moves, turning what began as a correction into an industry retreat.
As these signals accumulate, market sentiment has weakened, sparking debate over whether this represents a routine correction or a more significant structural change.
Normal Pullback Or Something More?
Bitcoin has long behaved as a momentum-driven asset, but the breakdown in sustained upside suggests that leadership within risk markets has shifted elsewhere.
Inflows into Bitcoin ETFs have slowed, prominent endorsements have grown quieter, and key technical indicators are flashing renewed weakness.
Price action reflects that cooling confidence. Bitcoin has struggled to regain momentum since its October peak near $126,000 and is now hovering closer to $90,000, reinforcing the sense that this divergence is being driven by fading conviction rather than short-term volatility alone.
Despite the current divergence, longer time horizons complicate the narrative.
On a multi-year basis, Bitcoin continues to outperform equities, suggesting the recent split may reflect earlier excess gains unwinding rather than a decisive break in trend.
From that perspective, underperformance could still align with a normal pullback within a broader bull-market cycle, despite calendar-year contrasts.
