Bitcoin (BTC) has largely decoupled from traditional markets this year, experiencing its first negative annual deviation in 10 years.
The S&P 500 index is expected to rise more than 16% in 2025, while Bitcoin is expected to end the year down about 3%, according to data compiled by Bloomberg. This is the first time since 2014 that Bitcoin has fallen while stock prices have risen significantly.
Bitcoin, which hit a new all-time high of over $126,000 at the beginning of the year, has suffered a significant decline in the past two months due to sharp declines, forced liquidations, and declining interest from retail investors. BTC has now fallen as much as 4.4% to $88,135, nearly 30% below its all-time high reached in October. This situation raises the question of why crypto assets continue to be under pressure despite Donald Trump’s re-election and expectations of an easing of the regulatory environment favorable to the sector.
During the pandemic, a significant correlation between Bitcoin and stocks emerged due to the low interest rate environment, with both asset classes experiencing strong rallies at the same time. But in 2025, the situation has reversed. While AI stocks hit records, capital spending increased, and investors turned aggressively to the stock market once again, Bitcoin failed to capture risk appetite. Meanwhile, gold and silver prices are nearing historic highs, indicating investors are increasingly looking for safe havens.
“Bitcoin is a momentum asset, and for most of the past decade, if there is a period of strong momentum, Bitcoin will outperform the market. This year, precious metals have attracted a significant portion of the momentum inflows that Bitcoin typically attracts,” said Matt Maley, chief market strategist at Miller Tabak.
Market sentiment is also rapidly deteriorating. Flows into Bitcoin ETFs have slowed, institutional support announcements have declined, and key technical indicators are starting to show less strength. Bitcoin’s daily record highs are getting shorter, suggesting that the rally is not sustained.
According to Stephane Ouellette, CEO and co-founder of Toronto-based FRNT Financial, the current situation is just a natural correction from Bitcoin’s very strong performance over the past two years. Ouellette noted that Bitcoin has still significantly outperformed the S&P 500 in two years, thanks in part to the Trump administration’s proactive approach to the sector. The analyst said the stock price was simply “catching up.”
“Comparisons to calendar years can be misleading. As of early October, Bitcoin had significantly outperformed the S&P 500 over the previous 12 months. This may be a normal pullback in a strong bull market, and it only temporarily distorts the relative performance trend,” Ouellette said.
*This is not investment advice.
