The divergence between U.S. equities and Bitcoin widened significantly following Bitcoin’s correction from its all-time high in October, reinforcing a broader decoupling trend that emerged during the second half of 2025.
After the U.S. Federal Reserve announced its third interest rate cut of the year, U.S. stocks moved higher, while Bitcoin initially slipped before recovering. That contrasting reaction has become a defining feature of recent market behavior.
Despite growing participation from traditional equity investors, Bitcoin has increasingly moved independently from stock markets.
Over the past six months, Bitcoin has declined nearly 18%, while major U.S. equity benchmarks delivered strong gains. The Nasdaq Composite rose 21%, the S&P 500 gained 14.35%, and the Dow Jones Industrial Average advanced 12.11%.
Still, Bitcoin achieved notable milestones in 2025, including new all-time highs and avoiding a seasonal September decline for the third consecutive year.
Bitcoin tracks equities in Q3, diverges in Q4
During the third quarter, Bitcoin largely moved in line with the three major U.S. stock indexes. That correlation began to weaken sharply in the fourth quarter.
July: GENIUS Act boosts crypto sentiment
July 2025 was marked by strong equity performance and resilient risk appetite, even as markets absorbed major tariff announcements. Early trade-related volatility quickly faded as investors refocused on earnings and growth trends.
On July 9, Nvidia became the first company to reach a $4 trillion valuation, while the S&P 500 and Nasdaq posted record highs despite the U.S. announcing steep copper tariffs.
Bitcoin finished July up 8.13%, its best monthly performance in the second half of the year. Crypto sentiment improved after President Donald Trump signed the GENIUS Act into law, boosting optimism around stablecoins and digital asset regulation.
Corporate adoption also remained strong, with firms continuing to add Bitcoin to their balance sheets. Interest in Ether and Solana began to rise as well.
August: Fed signals fuel crypto volatility
In August, expectations for Federal Reserve rate cuts drove rallies across traditional markets, while crypto prices moved more aggressively. Bitcoin surged to a new all-time high near $124,000 on Aug. 14, supported by a weaker U.S. dollar and rising trade tensions.
Momentum shifted after Fed Chair Jerome Powell’s dovish remarks at the Jackson Hole symposium. Ether reached a new all-time high, but Bitcoin failed to sustain its rally and resumed its decline. By the end of August, Bitcoin closed the month down 6.49%, clearly diverging from equities.
September: Bitcoin defies “red September” again
September is historically Bitcoin’s weakest month, but in 2025 the pattern broke again. Bitcoin posted a 5.16% gain, marking its third straight positive September.
The rally followed the Fed’s first rate cut of the year, a 25-basis-point reduction driven by signs of labor market cooling. Stocks also extended gains as investors priced in further easing.
However, Bitcoin faced internal friction as debate intensified over a proposed network upgrade that would lift limits on embedded data. The disagreement led to increased adoption of Bitcoin Knots as an alternative to Bitcoin Core.
October: Tariff threats trigger historic liquidation
Bitcoin reached another all-time high on Oct. 6, but the month quickly turned volatile. Roughly $19 billion in positions were liquidated, marking the largest liquidation event in Bitcoin’s history.
A combination of factors contributed to the sell-off, including a pricing glitch on Binance and heavy reliance on futures trading. The immediate trigger was a social media post from President Trump threatening 100% tariffs on Chinese imports, which sparked sharp declines across crypto and equity markets.
Bitcoin ended October down 3.69%, snapping a five-year streak of positive Octobers, even as stock markets recovered from the trade shock. The Fed delivered another 25-basis-point rate cut late in the month, while the U.S. government shutdown stretched through October.
November: Shutdown ends, Bitcoin struggles
November is historically Bitcoin’s strongest month, but 2025 proved to be an exception. Bitcoin fell 17.67%, slipping below $100,000 by mid-month.
Stocks traded mostly sideways as the government shutdown ended. AI bubble concerns lingered but eased later in the month after Nvidia posted record quarterly earnings, helping stabilize tech stocks.
December outlook weakens
Bitcoin has gained roughly 2% so far in December, while major equity indexes have also posted modest advances. Historically, December has delivered average Bitcoin returns of 4.54%, but optimism has faded this year.
Several institutions have lowered their year-end forecasts. Standard Chartered cut its Bitcoin price target from $200,000 to $100,000 and delayed its longer-term $500,000 projection from 2028 to 2030.
