Bitcoin May Underperform S&P 500 for First Time in a Decade

• Bitcoin’s 2025 return trails S&P 500 by over 19 percentage points, per Bloomberg data.

• AI enthusiasm and rising precious metals diverted speculative capital from cryptocurrencies.

• ETF inflows slowed, with Bitcoin dropping nearly 30% from its October peak of $126,000.

Bitcoin stumbles against stocks for the first time in a decade in 2025, as S&P 500 surges 16% on AI hype while BTC lags. Discover why and what it means for investors. Stay informed on crypto trends.

What Does It Mean When Bitcoin Stumbles Against Stocks?

Bitcoin stumbles against stocks when its yearly performance falls short of major equity indices like the S&P 500, signaling a shift in investor preferences away from cryptocurrencies. In 2025, this marks a historic reversal, with Bitcoin poised to end the year roughly 3% lower while stocks climb over 16%, according to Bloomberg projections. This divergence breaks a pattern established since 2014, where Bitcoin typically outpaced or matched equity gains during risk-on periods.

Why Is Bitcoin Underperforming the S&P 500 in 2025?

The underperformance stems from multiple factors reshaping market dynamics this year. Early in 2025, Bitcoin surged to record highs above $126,000, fueled by optimism around pro-crypto policies following Donald Trump’s re-election. However, this momentum faded rapidly due to forced liquidations across leveraged positions and a noticeable decline in retail investor participation. By late October, prices had retreated nearly 30%, stabilizing around $88,135, as enthusiasm waned.

Meanwhile, the S&P 500 benefited from robust gains in artificial intelligence-related stocks, with sectors like technology and semiconductors driving the index’s impressive run. Bloomberg data highlights that U.S. equities are on track for their strongest yearly performance in years, contrasting sharply with Bitcoin’s stagnation. Precious metals, including gold and silver, also captured investor attention, testing multi-year highs as hedges against economic uncertainty—flows that in past cycles might have bolstered crypto prices.

Matt Maley, a strategist at Miller Tabak + Co, attributes this shift to Bitcoin losing its status as the go-to momentum play. “Precious metals have absorbed capital that previously rotated into Bitcoin during speculative phases,” Maley noted in recent commentary. This redirection reflects broader market rotation, where AI narratives and commodity strength overshadowed cryptocurrency’s appeal.

Within the crypto space, signs of weakening sentiment were evident. Spot Bitcoin ETF inflows, which started strong in early 2025, tapered off significantly by mid-year. Institutional activity quieted, with fewer high-profile adoption announcements compared to previous bull runs. Technical indicators further underscored this: Bitcoin’s daily highs formed shorter sequences without the sustained upward thrust seen in 2020-2021, suggesting internal exhaustion rather than solely external pressures.

Regulatory tailwinds, once expected to propel prices higher, failed to materialize as anticipated. While Trump’s administration signaled friendlier policies, implementation delays and global economic crosscurrents—such as cooling inflation data boosting rate cut expectations—drew focus back to traditional assets. The U.S. economy’s resilient performance, evidenced by steady job growth and controlled inflation, further supported equities over volatile alternatives like Bitcoin.

Frequently Asked Questions

Has Bitcoin Ever Underperformed Stocks Before 2025?

Yes, Bitcoin underperformed the S&P 500 last in 2014, during a prolonged bear market phase that saw crypto prices plummet over 50% amid early adoption challenges. Prior to 2025, Bitcoin consistently outperformed or tracked equities closely in risk-on environments, benefiting from its status as a high-beta asset. This year’s divergence, however, is notable given the favorable political setup.

What Factors Are Causing Bitcoin to Stumble in 2025?

Several interconnected elements are at play, including surging AI stock rallies that captured speculative interest, rising precious metals prices drawing hedging capital, and slowing Bitcoin ETF inflows after an initial surge. Technical drawdowns from October peaks, combined with reduced retail and institutional engagement, have amplified this underperformance. Analysts like those at Bloomberg point to market rotation as the core driver, with equities reclaiming leadership.

Key Takeaways

• Historic Divergence: Bitcoin is projected to underperform the S&P 500 by about 19% in 2025, the first such instance since 2014, highlighting shifting investor priorities.
• Market Rotation Impact: AI-driven tech gains and precious metals strength redirected flows away from crypto, with gold and silver hitting highs that siphoned traditional crypto capital.
• Forward Outlook: Monitor ETF trends and policy developments; a rotation back to crypto could signal recovery into 2026, but diversified narratives may persist.

Conclusion

In 2025, Bitcoin’s stumble against stocks underscores a maturing financial landscape where cryptocurrencies no longer monopolize speculative enthusiasm. As the S&P 500 rides AI and economic resilience to 16% gains, Bitcoin’s underperformance against equities reveals competition from sectors like technology and commodities. Experts like Stephane Ouellette of FRNT Financial caution against overinterpreting this as a breakdown, noting Bitcoin’s long-term outperformance remains intact on multi-year views. Looking ahead, investors should watch for signs of capital rotation—whether back to crypto amid regulatory clarity or further diversification—positioning 2026 as a pivotal year for digital assets’ role in portfolios.

This development does not diminish Bitcoin’s foundational appeal as a store of value but illustrates how broader market forces influence its trajectory. With ETF data and sentiment indicators showing stabilization around current levels, opportunities may arise for strategic positioning. Stay attuned to evolving trends in Bitcoin vs. stocks dynamics to navigate the interplay between traditional and emerging asset classes effectively.

Delving deeper, the year’s events align with historical cycles where leadership rotates among high-growth themes. In 2021, loose monetary policy lifted both equities and Bitcoin; this time, targeted bets on AI and metals filled that void. Ouellette emphasized, “Equities are catching up after Bitcoin’s dominant run in prior years—even a modest pullback keeps crypto ahead over longer horizons.” FRNT Financial’s analysis supports this, showing Bitcoin’s 12-month outperformance persisting into early October before the recent slide.

Broader implications extend to investor behavior. Retail participation, once a crypto hallmark, has cooled as platforms report lower trading volumes. Institutional players, while still committed via ETFs, appear more selective, prioritizing diversified exposure. Bloomberg’s projections, based on year-to-date figures, reinforce the gap: S&P 500 at +16% versus Bitcoin’s -3%, a stark contrast to the asset’s 2024 triple-digit returns.

Technical perspectives add nuance. Bitcoin’s retreat from $126,000 reflects overextended leverage unwinding, with open interest dropping sharply post-peak. Yet, support levels near $88,000 have held, suggesting resilience. If political catalysts like clearer U.S. regulations materialize, this could reverse the stumble, drawing flows back from stocks.

Ultimately, 2025 serves as a reminder of crypto’s integration into global markets. No longer isolated, Bitcoin now competes directly with established narratives, fostering a more balanced ecosystem. For stakeholders, this evolution demands vigilant monitoring, blending traditional analysis with blockchain-specific metrics for informed decision-making.