Bitcoin struggles as S&P 500 and Nasdaq rally – What’s holding BTC back?

International markets struggled via 2025 after shifts in the US’ commerce insurance policies weighed on threat belongings.

Each the S&P 500 and the Nasdaq posted drawdowns earlier this yr. Nonetheless, Bitcoin [BTC] suffered sharper stress, significantly throughout the fourth quarter.

Even so, Bitcoin more and more diverged from equities.

Correlation hit yearly lows

Traditionally, Bitcoin and U.S. equities confirmed a powerful correlation throughout main market cycles. That relationship weakened materially in current months.

In accordance with analyst Darkfost, BTC’s correlation with the S&P 500 and the Nasdaq fell to yearly lows. The divergence emerged after markets cooled following tariff and trade-war considerations.

Whereas U.S. equities maintained upward momentum, Bitcoin struggled to regain its prior uptrend.

Supply: S&P International

The S&P 500 rose about 2.06% quarter-to-date and roughly 16% year-to-date, climbing from close to 5,400 to round 6,900. On the similar time, the Nasdaq Composite gained about 4.76% within the fourth quarter and roughly 20.12% in 2025.

In contrast, Bitcoin remained underneath stress after a drawdown of roughly 36%. Its restoration try stalled, widening the efficiency hole.

Supply: Checkonchain

Bitcoin’s correlation with SPX dropped to round -0.299, whereas correlation with the Nasdaq fell close to -0.24.

Correlations with Gold and the U.S. Greenback Index additionally weakened, whereas U.S. Treasuries confirmed relative energy.

Lengthy-term metrics informed one other story

Quick-term underperformance contrasted with Bitcoin’s longer-term return profile.

Utilizing the Compound Annual Progress Price, Bitcoin continued to outperform conventional belongings over longer horizons. CAGR filtered out short-term volatility and targeted on sustained progress.

Supply: Checkonchain

Bitcoin’s five-year CAGR stood above 200%, translating to roughly 47% yearly. Over the identical interval, the S&P 500 averaged close to 17%, whereas the Nasdaq sat shut to twenty%.

That knowledge recommended Bitcoin’s long-term correlation with equities remained uneven, pushed extra by return potential than short-term co-movement.

What the divergence meant

The correlation breakdown carried blended implications for Bitcoin.

On one hand, weakening alignment strengthened BTC’s standing as a definite asset class. Fairness market drawdowns could not robotically spill into crypto.

However, decoupling restricted Bitcoin’s capability to learn from fairness rallies. Capital rotated into artificial-intelligence and data-center shares, leaving crypto sidelined.

That divergence left Bitcoin buying and selling independently, with macro sentiment exerting uneven affect.

Remaining Ideas

• Bitcoin’s decoupling from equities reframed its function inside broader markets relatively than weakening its long-term case.
• That independence could enhance short-term volatility, however it might additionally redefine how BTC responds to future macro shifts.