Bitcoin’s Worst Performance Since FTX Era Raises Eyebrows

Since late August, Bitcoin has broken out of the currency in what appears to be its weakest stock correlation since the 2022 crisis.

Bitcoin’s recent performance diverges from its long-term trend with stocks. Six months ago, we slept while stocks stabilized and gold rose.

This trend created an unusually weak correlation and recalled the rare moments when crypto briefly moved independently of the broader financial markets.

Rare Market Divergence

For many years, Bitcoin has tended to move in the same direction as traditional stock markets, especially the S&P 500. During periods of low interest rates and strong economic growth, such as in 2021 and again in parts of 2024, BTC and many altcoins have performed well in line with rising stocks.

On the other hand, in times of increasing fear and monetary policy tightening, including aggressive Federal Reserve rate hikes, crypto markets tend to fall in line with equities, as seen in 2018 and 2022.

A clear example occurred in November 2022, when rising interest rates combined with the fall of FTX brought Bitcoin down to around $15,700. This is one of the worst cases of crypto markets falling more than stocks.

In the past six months, however, Bitcoin has begun to move in a very different direction to the stock. Since late August, gold has risen 51%, the S&P 500 has gained 7%, while Bitcoin has fallen 43%, creating the weakest correlation between BTC and stocks since the market turmoil of late 2022.

Instead of moving in line with equities, Bitcoin has underperformed as traditional markets have remained stable and gold has seen strong gains. According to Santiment, such dramatic deviations from long-standing relationships do not normally occur.

You may also like:

Past trends clearly show that markets fluctuate as sentiment and macroeconomic conditions change, leading to changes in capital flows over time. Within this context, Santiment added that if BTC eventually returns to its historical tendency to track stocks during economic expansion, especially in a scenario involving three interest rate cuts in the second half of 2025, there could be significant room for Bitcoin and altcoins to take part.

Bearish Pressure

Bitcoin saw a modest rebound on Wednesday as it briefly rose above the $66,000 level before giving back part of its gains and settling above $65,000.

But the data suggests bearish pressure on the BTC futures market, as currency prices remain negative throughout the $62,000-$68,000 range. Additionally, CryptoQuant said that Bitcoin may not have formed a real base yet. Short-term holders have been selling at a loss for about 30 days, and many large spikes have been sold without causing a further rebound.

Despite short price pumps, selling pressure remains dominant. These rallies act as an exit, and a meaningful pullback is unlikely until short-term owners’ profits turn positive and stay there, the report added.