Bitcoin has detached from its long-term correlation with stocks, marking the first full annual divergence from stocks in over a decade.
The change highlights the growing gap between cryptocurrencies and traditional markets and raises questions about Bitcoin's role in the current cycle.
Historical market detachment
Bitcoin and stocks have historically moved in the same direction. However, this relationship now seems to have broken down.
According to Bloomberg data, the S&P 500 has risen over 16% this year, while Bitcoin has dropped by 3%. This is the first time since 2014 that such a large gap has occurred.
Such a clear detachment is rare even in the crypto markets and has increased scrutiny of Bitcoin's role in global markets. This development challenges expectations that regulatory optimism and institutional participation would automatically lead to sustainable development.
The difference is particularly striking in the current market environment, where AI stocks are rising, capital expenditures are accelerating, and investors are returning to stocks. At the same time, traditional defensive asset classes are attracting interest, suggesting that investors are changing their portfolio structure rather than broadly increasing risk-taking.
Pressures related to the crypto markets, such as forced liquidations and a significant decrease in retail investor participation, have been significant factors in Bitcoin's weak performance. Billions of dollars worth of liquidated positions have intensified downward pressure, and a mild correction has turned into a withdrawal across the entire sector.
When these signals accumulate, the market sentiment has weakened. Now there is a discussion about whether it is a normal correction or a more significant structural change.
Normal correction or something more?
Bitcoin has long acted as a sentiment-dependent asset, but the weakening of the ongoing uptrend suggests that the leadership of risk markets has shifted elsewhere.
Investments in Bitcoin ETFs have slowed, visible recommendations have decreased, and key technical indicators signal new weakness.
The price development reflects declining confidence. Bitcoin has failed to restore its sentiment near its October peak of about 126,000 dollars, and is now trading near 90,000 dollars, reinforcing the notion that the detachment is increasingly driven by waning faith, not just short-term volatility.
Despite the current detachment, the longer timeframe makes the story more multifaceted.
In a multi-year view, Bitcoin continues to outperform stocks, suggesting that the recent divergence may reflect a correction of previous excessive returns rather than a clear change in direction.
From that perspective, weak development can still fit as part of a broader bull market cycle as an ordinary correction, even though the figures for the calendar year differ significantly.
