Bitcoin’s Correlation with Equities Hits 2025 Lows Amid Market Divergence

Bitcoin

Bitcoins Correlation with Equities Hits 2025 Lows Amid Market Divergence

Bitcoin‘s correlation with equities in 2025 has hit yearly lows, dropping to -0.299 with the S&P 500 and -0.24 with the Nasdaq, signaling a clear divergence amid U.S. trade policy shifts. This decoupling highlights Bitcoin’s growing independence from traditional markets despite short-term underperformance.

• Bitcoins short-term correlation with U.S. equities weakened significantly in late 2025, influenced by tariff concerns and market cooling.
• The S&P 500 rose 2.06% quarter-to-date and 16% year-to-date, while the Nasdaq gained 4.76% in Q4 and 20.12% annually, contrasting Bitcoins 36% drawdown.
• Over five years, Bitcoin‘s CAGR exceeds 200% or 47% annually, far outpacing the S&P 500’s 17% and Nasdaqs 20%, underscoring long-term strength.

What is the Bitcoin correlation with equities in 2025？

Bitcoin correlation with equities in 2025 has notably declined, reaching yearly lows as the cryptocurrency increasingly operates independently from traditional stock markets. This shift became evident during the fourth quarter, when U.S. trade policy changes, including tariff escalations, pressured risk assets but affected Bitcoin more severely than indices like the S&P 500 and Nasdaq. Despite short-term challenges, this divergence positions Bitcoin as a unique asset class, potentially insulated from equity volatility.

Global financial markets faced headwinds throughout 2025 due to evolving U.S. trade policies that dampened investor sentiment toward riskier investments. While the S&P 500 and Nasdaq experienced initial drawdowns, they recovered steadily, posting gains that reflected broader economic resilience. Bitcoin, however, encountered steeper declines, particularly in the latter half of the year, as its price failed to mirror the rebound seen in equities.

How has Bitcoins short-term correlation with traditional finance assets evolved？

Bitcoins short-term correlation with traditional finance, or TradFi, assets has weakened considerably in 2025, marking a departure from historical patterns where the cryptocurrency often moved in tandem with U.S. equities during major economic cycles. Analyst Darkfost noted that this correlation with the S&P 500 plummeted to -0.299, while the link to the Nasdaq dipped to around -0.24. These figures emerged following a period of market stabilization after heightened concerns over trade wars and tariffs, which initially rattled investors across asset classes.

The S&P 500, a benchmark for U.S. large-cap stocks, advanced approximately 2.06% in the fourth quarter and an impressive 16% for the full year, rising from around 5,400 to nearly 6,900 points. Similarly, the Nasdaq Composite, heavily weighted toward technology firms, surged 4.76% quarter-to-date and 20.12% year-to-date. In stark contrast, Bitcoin endured a roughly 36% drawdown, with recovery efforts stalling and exacerbating the performance disparity between crypto and equities.

Source: S&P Global

Correlations extended beyond equities, with Bitcoin showing diminished ties to gold and the U.S. Dollar Index, while maintaining a relatively stronger alignment with U.S. Treasuries. This broader decoupling suggests that macroeconomic factors influencing traditional assets are not uniformly impacting Bitcoin, potentially due to its decentralized nature and appeal to a distinct investor base.

Experts like those from Checkonchain emphasize that such metrics provide a clearer picture of market dynamics. “The negative correlation values indicate Bitcoin is behaving more like a hedge against equity downturns, rather than a high-beta extension of stock market movements,” one analysis from Checkonchain highlighted. This perspective aligns with data showing Bitcoins price resilience in non-equity-driven environments, though short-term volatility remains elevated.

Source: Checkonchain

From a statistical standpoint, correlation coefficients below zero imply inverse movements, where Bitcoin may rise as equities fall or vice versa. This trend, observed since mid-2025, could stem from institutional adoption of Bitcoin as a portfolio diversifier, reducing its sensitivity to stock market swings. Regulatory developments and growing mainstream acceptance further support this evolution, as noted in reports from financial analysts monitoring crypto-traditional asset interplay.