Bitcoin’s recent performance differs from its long-standing pattern of moving with stocks. Over the past six months, it has lagged while equities stayed stable and gold rose.
The trend created an unusually weak correlation and recalled rare periods when crypto briefly moved independently from broader financial markets.
Rare Market Divergence
For many years, 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, such as in 2021 and again in parts of 2024, BTC and many altcoins performed well alongside rising stocks.
On the other hand, during periods of increased fear and tightening monetary policy, including aggressive Federal Reserve rate hikes, crypto markets tended to decline in tandem with equities, as seen in 2018 and 2022.
A clear example occurred in November 2022, when rising interest rates combined with the collapse of FTX pushed Bitcoin down to approximately $15,700. This is one of the most extreme cases of crypto markets falling far more sharply than equities.
Over the past six months, however, Bitcoin has started to move very differently from stocks. Since late August, gold has risen by 51%, the S&P 500 has gained 7%, while Bitcoin has fallen 43%, creating the weakest correlation between BTC and stocks since the market chaos of late 2022.
Rather than moving in step with equities, Bitcoin has significantly underperformed as traditional markets have remained relatively stable and gold has seen strong gains. According to Santiment, such dramatic deviations from long-standing correlations do not typically continue indefinitely.
Previous instances clearly show that markets rotate as sentiment and macroeconomic conditions evolve, which results in changing capital flows over time. Within this context, Santiment added that if BTC eventually returns to its historical tendency of tracking equities during economic expansions, particularly in a scenario involving three interest rate cuts in the second half of 2025, there could be significant room for Bitcoin and altcoins to catch up.
Bearish Pressure
Bitcoin saw a modest rebound on Wednesday as it briefly climbed above the $66,000 level before giving back part of its gains and stabilizing above $65,000.
But data suggests bearish pressure in the BTC futures market, as funding rates remained largely negative across the $62,000-$68,000 range. Additionally, CryptoQuant stated that Bitcoin may not have formed a true bottom yet. Short-term holders have been consistently selling at a loss for nearly 30 days, and multiple large sell spikes have been absorbed without triggering a sustained rebound.
Despite brief price pumps, selling pressure has remained dominant. These rallies are acting as exit liquidity, and a meaningful trend reversal is unlikely until short-term holder profits turn positive and remain there, the report added.
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