Bitcoin Poised for Its First Year of Divergence from Equities in 10 Years

The S&P 500 has surged more than 16% so far in 2025, while Bitcoin has slipped roughly 3% marking the first year since 2014 that US equities have risen decisively as the world’s largest cryptocurrency has fallen, according to data.

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Such a clean break between Bitcoin and other risk assets has been extremely rare, even during prior crypto bear markets. The divergence is surprising given widespread expectations that digital assets would flourish under President Donald Trump’s return to the White House, especially amid friendlier regulation and a renewed push toward institutional adoption.

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Earlier this year, Bitcoin set a new all-time high above $126,000. But momentum collapsed quickly. A sharp, two-month selloff intensified by billions of dollars’ worth of forced liquidations and fading retail enthusiasm has dragged down the entire crypto ecosystem. Bitcoin looked set to close the week on another weak note, tumbling as much as 4.4% to $88,135 on Friday. That leaves it roughly 30% below its October peak.

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Historically, Bitcoin and the broader equity market have tended to move in the same direction. That correlation strengthened during the pandemic, when near-zero interest rates fueled synchronized rallies across stocks, digital assets, and speculative pockets of the market. For years, Bitcoin behaved like a high-beta extension of growth-driven, risk-on trades.

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Now, that relationship appears to have broken down. The decoupling is particularly notable given the broader market backdrop: artificial intelligence stocks continue to soar, capital spending is accelerating, and investors have been steadily funneling money back into US equities. At the same time, traditional safe-haven metals such as gold and silver are trading just shy of record highs.

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“Bitcoin is a momentum-driven asset,” said Matt Maley, chief market strategist at Miller Tabak + Co. “In most of the past decade, when investors were chasing strong bullish momentum, Bitcoin was typically at the front of the pack. This year, precious metals have absorbed much of the momentum money that would normally flow into Bitcoin.”

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Market sentiment toward the token has deteriorated rapidly. Bitcoin ETF inflows have cooled considerably, high-profile endorsements have quieted, and several market indicators are signaling fatigue. One example: the token’s streak of consecutive daily highs historically a sign of strong upward pressure lasted only three sessions this year. That’s the shortest such run for any year in which Bitcoin reached new records, suggesting that recent rallies have struggled to sustain traction.

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Still, not everyone views Bitcoin’s lag as a sign of deeper trouble. Stephane Ouellette, CEO and co-founder of FRNT Financial Inc. in Toronto, argues that the digital asset is simply giving back some gains after outperforming other markets earlier on. Over a two-year period, Bitcoin’s performance still far exceeds that of the S&P 500 a dynamic he partially attributes to the Trump administration’s supportive stance toward digital assets. In his view, equities have been “catching up” rather than Bitcoin falling behind.

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“The timing of the calendar year can distort the comparison,” Ouellette noted. “As of early October, Bitcoin had dramatically outperformed the S&P 500 on a trailing twelve-month basis. What we’re seeing now may just be a normal bull-market pullback that happens to skew the narrative around relative performance.”

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Whether the divergence closes or widens from here depends on a range of forces from macroeconomic conditions to liquidity trends to shifts in regulatory tone. For now, though, 2025 is shaping up as a rare year in which Bitcoin is no longer moving in lockstep with traditional risk assets. For investors, that break in correlation raises new questions about how the cryptocurrency should be positioned within diversified portfolios in the months ahead.

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