Bitcoin Decouples from Stocks: Weakest Correlation Since 2022

For years, Bitcoin’s price action has frequently mirrored that of traditional equity markets, particularly the S&P 500. During periods of economic expansion and low interest rates, such as 2021 and parts of 2024, both asset classes tended to rise together. Conversely, during times of monetary tightening and market fear, exemplified by the aggressive Federal Reserve rate hikes in 2018 and 2022, crypto and stocks declined in tandem. The November 2022 period, where rising rates and the collapse of FTX pushed Bitcoin to approximately $15,700, stands as an extreme example of correlated, albeit more severe, downside for crypto.

This established pattern has now broken. Over the past six months, a stark divergence has emerged. Since late August, gold has surged by 51% and the S&P 500 has gained a steady 7%. In stark contrast, Bitcoin has fallen 43%. This performance gap has created the weakest statistical correlation between Bitcoin and stocks since the market chaos of late 2022. Rather than moving in step, Bitcoin has significantly lagged as traditional markets held firm and gold, often seen as a safe-haven asset, experienced strong gains.

According to analytics firm Santiment, such dramatic deviations from long-standing correlations do not typically persist indefinitely. Historical analysis shows that markets rotate as investor sentiment and macroeconomic conditions evolve, leading to shifting capital flows over time. Santiment’s perspective introduces a critical nuance: while the decoupling is notable, it may represent a phase rather than a permanent structural shift.

Within this context, Santiment added a forward-looking scenario. If Bitcoin eventually reverts to its historical tendency of tracking equities during economic expansions, a significant catch-up rally could be possible. This scenario is particularly relevant if macroeconomic conditions shift, such as the Federal Reserve implementing three interest rate cuts in the second half of 2025. Such a dovish pivot could reignite risk appetite and potentially channel capital back into crypto assets, allowing Bitcoin and altcoins to close the performance gap with equities.

Despite the potential for a future correlation-driven rally, current on-chain and derivatives data paint a bearish near-term picture. Bitcoin saw a modest rebound recently, briefly climbing above $66,000 before stabilizing above $65,000. However, underlying metrics suggest this was a technical bounce rather than a trend reversal.

Data reveals sustained bearish pressure in the BTC futures market, with funding rates remaining largely negative across the $62,000 to $68,000 price range. Negative funding rates indicate that traders holding short positions are paying those holding longs, reflecting a prevailing bearish sentiment among leveraged derivatives traders.

Furthermore, analysis from CryptoQuant states that Bitcoin may not have formed a true market bottom yet. The firm highlights that short-term holders—investors who purchased coins within the last 155 days—have been consistently selling at a loss for nearly 30 consecutive days. Multiple large sell spikes have been absorbed by the market without triggering a sustained price recovery. CryptoQuant’s report concludes that despite brief price pumps, selling pressure has remained dominant, with these rallies acting merely as ‘exit liquidity’ for sellers. A meaningful trend reversal, the report adds, is unlikely until the realized profits of short-term holders turn positive and remain there, signaling a shift in holder psychology from capitulation to confidence.