Bitcoin (BTC) is experiencing a notable decoupling from traditional financial markets in 2025, marking the first time in a decade that it has shown a negative divergence while equities rise. Data from Bloomberg indicates that the S&P 500 index is projected to increase by over 16% in 2025, whereas Bitcoin is anticipated to end the year with a decline of approximately 3%. This represents the first annual decrease for Bitcoin since 2014, coinciding with a strong rally in stock markets.
Initially, Bitcoin reached a record high exceeding $126,000 at the start of the year. However, it has since faced a considerable pullback, losing as much as 4.4% today to settle at $88,135, nearly 30% below its all-time high achieved in October. This downturn raises critical questions regarding the persistent pressure on crypto assets, even amid expectations of a favorable regulatory environment and potential re-election of Donald Trump.
During the pandemic, a robust correlation developed between Bitcoin and traditional stocks, largely due to the low interest rates that propelled both asset classes to new heights. However, the landscape has shifted dramatically in 2025. Despite record-breaking performances from AI stocks and a surge in capital expenditures, investor appetite has not translated into momentum for Bitcoin.
As precious metals like gold and silver approach historic highs, a trend of investors seeking safe-haven assets has become evident. Matt Maley, the chief market strategist at Miller Tabak + Co., noted, “Bitcoin is a momentum asset,” indicating that in periods of strong market momentum, Bitcoin traditionally outperforms. This year, however, a significant portion of the momentum inflows that usually favor Bitcoin have instead gravitated towards precious metals.
Market sentiment surrounding Bitcoin has deteriorated sharply. There has been a noticeable slowdown in inflows into Bitcoin ETFs, and announcements of institutional support have waned. Key technical indicators are also suggesting a loss of momentum, with a declining streak of consecutive daily highs indicating that the recent rally has not been sustained.
According to Stephane Ouellette, CEO and co-founder of FRNT Financial, the current market behavior is simply a natural correction following Bitcoin“s strong performance over the past two years. He pointed out that Bitcoin has still outperformed the S&P 500 significantly over the last two years, largely influenced by the favorable stance of the Trump administration towards the crypto sector. Ouellette stated, “Calendar-year comparisons can sometimes be misleading.” He added that as of early October, Bitcoin had indeed outshone the S&P 500 over the past 12 months, suggesting that this pullback could be a typical correction within a robust bull market rather than a sign of a fundamental shift.
