In the last five years, the price of Bitcoin has risen 1,070%. Over that same period, the Nasdaq has risen 83% and the S&P 500 is higher by 81%.
Index returns are well ahead of historical averages for large-cap stocks and reflect a persistent (albeit briefly interrupted by bear markets) “risk-on” market bent.
Bitcoin’s massive outperformance during that window, and indeed, its performance since its inception, have helped establish a general consensus that the cryptocurrency trades as an extension of risk appetite in the markets.
The high level of volatility in the token frequently causes Bitcoin to decouple from stocks in short windows, but over a longer timeframe, it is generally correlated with equities.
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Analysis by Fidelity conducted last year found a 0.19 (or 19%) correlation with stocks (their analysis used the S&P 500) over a five-year period.
You can see that general correlation reflected in the three-year chart comparing Bitcoin to the U.S. dollar and the Nasdaq below.
When the Nasdaq is heading lower, Bitcoin is doing the same, and when the Nasdaq is pushing higher, Bitcoin is as well, although the moves in each direction are amplified.
The following chart, from FXStreet, shows a more granular look at that correlation and reinforces that crypto and stocks are typically positively correlated (moving in the same direction) but with different magnitudes, as well as periods of divergence.
In the short term, the correlation between Bitcoin and the Nasdaq reached as high as 0.68 as of the end of March (chart is dated March 25), and that’s borne out in the second chart below.
You can see that the gold line (Bitcoin) is moving nearly in lockstep with the blue line (Nasdaq) from the beginning of 2025 until the first weeks of April.
What I am most interested in, at the moment, is what’s been happening even more recently. Namely, since tariff “Liberation Day.”
In the last two weeks, the Nasdaq is higher by 1.1%, having bounced on the tariff delay, but is in the process of reversing those gains.
Bitcoin, on the other hand, is higher by 13.6% and is in the midst of a new uptrend.
As I write this on Monday, April 21, the Nasdaq is lower by 3.1% and Bitcoin is trading higher by 3.5% on the day.
I believe it begs the question of whether weakness in the U.S. dollar is finally decoupling Bitcoin from stocks.
Before considering it, the chart from FXStreet deserves more attention.
Bitcoin is coming off a period of extremely high short-term correlation.
What is currently playing out could simply be a bit of mean reversion.
The chart notes themselves (which predate the current divergence) fully anticipated at least some degree of the latest move.
And, given the volatility of Bitcoin, it’s a bit risky to extrapolate short-term moves into a longer-term trend.
But, should this continue and prove to be more than just a short-term divergence, I do believe there’s a clear method for discerning that the decoupling from stocks is becoming a more permanent feature.
Watch the U.S. Dollar to Confirm Whether Bitcoin Is Decoupling from Stocks
You may have noticed that the three-year and year-to-date charts each include the performance of the U.S. dollar (green line).
While the three-year chart and most of the year-to-date chart show no clear relationship between dollar strength and Bitcoin performance, that’s shown signs of changing.
So far in 2025, the dollar has lost 9.4% against a basket of global currencies, with half of those losses since Liberation Day, as a “sell America” trade has gained traction on Wall Street.
Investors have been dumping Treasurys (10-year yields from 4% to 4.4%; prices and yields move in opposite directions) and stocks, a phenomenon that’s rarely seen in the markets due to Treasurys’ safe-haven appeal.
Bitcoin is dollar-denominated, but it is not a dollar-based asset. As such, it stands to continue gaining ground if the U.S. dollar continues to weaken, regardless of the performance of U.S. stocks.
That’s not to say it’s the best safe-haven asset for a weakening dollar (foreign currency ETFs are an easier hedge for most investors), and we’ve yet to see how this new dynamic may fully play out if there is a significant bear market in the states, but if the devaluation of the dollar is just getting started, Bitcoin may finally be decoupling from U.S. risk assets.
For most investors, especially those worried about the dollar, adopting Bitcoin is still probably a bridge too far, but if you’re already a Bitcoin bull, I think you can rest a bit easier (and maybe take a victory lap over long-term doubters) even if tech stocks continue to weaken.
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