Bitcoin has detached from its long-standing correlation with the stock market, marking the first year in over a decade that Bitcoin's performance and stocks have moved in two separate directions.
This development highlights the growing decoupling between the crypto market and traditional finance, leading many to question Bitcoin's Vai in the current cycle.
A historical separation of markets
Bitcoin and the stock market used to tend to move together. But that link now appears to have broken.
According to data from Bloomberg, the S&P 500 index has risen more than 16% since the beginning of the year, while Bitcoin has fallen 3%. This is the first time such a significant difference has appeared since 2014.
Such a clear separation is rare even within the crypto market, prompting many to XEM Bitcoin's position in global markets . This development also challenges expectations that regulatory optimism and institutional participation would automatically help Bitcoin maintain strong performance.
What makes this situation stand out is that, against the backdrop of a broader market where AI stocks are surging, investments are accelerating, and investor funds are flowing back into the stock market. At the same time, traditional defensive assets are also attracting significant interest, indicating that investors are adjusting their portfolios rather than taking on widespread risk.
The inherent pressures within the crypto industry, including forced liquidations and a significant drop in retail investor activity, have kept Bitcoin lagging behind. Billions of dollars in closed positions have amplified the decline, turning an initial correction into a sector-wide pullback.
As these signals become more frequent, market sentiment weakens , leading to debate about whether this is just a normal correction or a sign of a larger structural change.
Is this a normal adjustment, or something else?
Bitcoin has long been XEM as an asset driven by upward momentum, but the noticeable slowdown in that rally suggests the risk asset market has found new leadership elsewhere.
Capital into Bitcoin ETFs are slowing, prominent support is fading, and key technical indicators are beginning to signal weakness.
Price volatility suggests that confidence in Bitcoin is cooling. After a sharp surge to nearly $126,000 in October, Bitcoin is now fluctuating around $90,000, further reinforcing the view that this price drop stems from weakening confidence, rather than just short-term volatility .
Despite the current separation, the situation is more complicated in the long term.
Over the years, Bitcoin has consistently outperformed the stock market. This suggests that the recent slowdown may be a correction from past excessive gains, rather than the complete end of a trend .
From this perspective, short-term underperformance could still be part of the normal corrective pattern of a major bull cycle, despite significant differences between years.
