Bitcoin has decoupled from major stock indices, marking its weakest correlation with equities since late 2022. While gold and the S&P 500 have posted gains over the past six months, Bitcoin has significantly underperformed, diverging from its historical pattern of moving in tandem with traditional markets.
Bitcoin has broken from equities, showing its weakest stock correlation since late 2022. Over the past six months, it has lagged while equities stayed stable and gold rose significantly.
This trend created an unusually weak correlation and recalled rare periods when crypto moved independently from broader financial markets. Bitcoin has frequently moved in the same direction as traditional equity markets, especially the S&P 500.
During periods of low interest rates and strong economic growth, BTC performed well alongside rising stocks. Conversely, during periods of increased fear and tightening monetary policy, crypto markets tended to decline in tandem with equities.
Since late August, gold has risen by 51%, the S&P 500 has gained 7%, while Bitcoin has fallen 43%. Santiment noted that such dramatic deviations from long-standing correlations do not typically continue indefinitely.
Previous instances show that markets rotate as sentiment and macroeconomic conditions evolve. Santiment added that if BTC eventually returns to its historical tendency of tracking equities during economic expansions, there could be significant room for it to catch up.
Meanwhile, data suggests bearish pressure in the BTC futures market, as funding rates remained largely negative. CryptoQuant stated that Bitcoin may not have formed a true bottom yet, noting that short-term holders have been consistently selling at a loss for nearly 30 days.
Multiple large sell spikes have been absorbed without triggering a sustained rebound. Despite brief price pumps, selling pressure has remained dominant, with these rallies acting as exit liquidity.
