Data compiled by Bloomberg shows that while the S&P 500 gained over 16% in 2025, Bitcoin declined by 3%. This marks the first time since 2014 that the cryptocurrency has fallen during a stock market rally.
Even during previous crypto winters, Bitcoin rarely exhibited such a stark divergence from other risk assets. The current deviation has defied market expectations—many had anticipated a crypto boom under favorable regulatory conditions and institutional inflows following Donald Trump’s return to the White House.
Earlier this year, Bitcoin hit an all-time high above $125,000. However, a two-month sell-off triggered an industry-wide downturn, fueled by billions in forced liquidations and waning retail trading momentum. This week, Bitcoin briefly dropped to around $85,000—nearly 30% below its peak—before rebounding above $90,000 on Tuesday.
Historically, Bitcoin has moved in tandem with equities, a correlation that was particularly pronounced during the pandemic-era low-rate environment, which lifted stocks, crypto, and speculative investments alike.
Once regarded as a "high-beta partner" for growth-oriented risk trades, Bitcoin has now broken from this trend. The divergence is especially striking given broader market conditions: AI-related stocks have surged, capital expenditures have spiked, and investors have flocked back to equities. Meanwhile, gold and silver prices are nearing record highs.
"Bitcoin is a momentum-driven asset," said Matt Maley, Chief Market Strategist at Miller Tabak + Co. "For most of the past decade, when market momentum was strongly bullish, Bitcoin led the charge. This year, precious metals have siphoned off much of that momentum capital."
Sentiment toward cryptocurrencies has deteriorated rapidly. Bitcoin ETF inflows have slowed, high-profile endorsements have waned, and key metrics—such as Bitcoin’s longest streak of consecutive daily highs—signal weakness. In 2025, Bitcoin’s longest run of daily record highs lasted just three sessions, the lowest in any year it achieved new peaks, suggesting unsustainable upward momentum.
Stephane Ouellette, CEO and Co-Founder of FRNT Financial Inc., argues that Bitcoin’s underperformance stems from its prior outsized gains relative to other assets. Over a two-year horizon, he notes, Bitcoin still vastly outperforms the S&P 500—a trend partly attributable to the Trump administration’s pro-crypto stance. In his view, equities are merely "catching up" to Bitcoin’s earlier rally.
"Calendar-year comparisons can distort this metric," Ouellette added. "As of early October, Bitcoin’s 12-month returns still far exceeded the S&P 500’s. The current pullback may simply be a routine correction within a bull market—one that happens to skew the broader narrative of relative performance."
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