Bitcoin is breaking its long-standing correlation with stocks and is fully separating from the markets for the first time in over 10 years.
This change indicates that the link between cryptocurrency and traditional markets is weakening, leaving questions about Bitcoin's role in the current cycle.
A Historic Market Decoupling
In the past, Bitcoin and stocks mostly moved in the same direction. In fact, this relationship now seems to have broken.
According to Bloomberg data, the S&P 500 index has risen by more than 16% this year, but Bitcoin is down 3%. This is happening for the first time since 2014.
Such a clear divergence is not even a usual occurrence in the cryptocurrency market, and Bitcoin's role in global markets is being re-discussed. This divergence raises questions about the expectations that regulatory expectations and institutional interest will automatically guarantee a lasting rise.
This situation is particularly noteworthy because the overall atmosphere is quite different: artificial intelligence stocks are hitting records, capital expenditures are accelerating, and investors are flocking back to the stock markets. On the other hand, interest in traditional safe havens is increasing; that is, investors are rebalancing their portfolios rather than taking on total risk.
Crypto-specific pressures, forced liquidations, and a sharp decline in individual investor interest have further highlighted Bitcoin's weak performance. The closure of billions of dollars in positions deepened the sales and transformed a process that initially began as a correction into a pullback affecting the entire sector.
All these signals are accumulating and market sentiment is weakening; this leads to debates about whether this is a normal correction or a sign of a larger structural change.
Is it a Normal Pullback or Something More?
While Bitcoin has long been a momentum-focused asset, the break in upward momentum indicates that market leadership is shifting to other areas.
Inflows into Bitcoin ETFs have slowed down, effective supports have quieted, and significant technical indicators are signaling renewed weakness.
Price movements also reveal this declining confidence. Bitcoin is struggling to recover after peaking at around $126,000 in October and is now hovering closer to $90,000. This picture indicates that the divergence is triggered not only by short-term volatility but also by investors losing faith.
Despite the current divergence, the longer term tells a different story.
When considering multiple years, Bitcoin still outperforms stocks. Thus, this recent divergence can also be evaluated as a return of excessive gains; rather than a definitive trend reversal.
From this perspective, this low performance may overlap with a natural pullback of a bull market cycle despite annual differences.
