Bitcoin’s Prolonged Lag Versus Stocks Signals Unusual Market Shift
Bitcoin is wrapping up a difficult stretch, posting steep back-to-back quarterly losses while trailing U.S. equities for an unprecedented period.
The cryptocurrency is down about 22% in the first quarter of 2026, following a 25% drop in the final quarter of 2025. Over the same timeframe, the S&P 500 has declined far less, creating a notable and sustained performance gap.
According to Mark Connors, founder of Risk Dimensions, the duration of bitcoin’s underperformance stands out. Data shows the asset has consistently lagged equities since early October — the longest such stretch on record. While bitcoin has seen deeper drawdowns in the past, those episodes were typically shorter.
The weakness has unfolded alongside broader market stress. U.S. stocks just recorded their worst quarter in four years, with the Nasdaq down more than 10% from recent highs. Combined losses across equities and crypto have effectively unwound much of the rally that followed the 2024 election.
Policy developments have offered a mixed backdrop. Regulatory progress includes a more supportive environment for crypto ETFs under new SEC leadership, alongside legislative efforts such as the GENIUS Act. In addition, an executive order signed by President Donald Trump in August aims to expand access to alternative assets — including crypto — within retirement accounts.
Despite the broader downturn, bitcoin showed relative resilience in March.
Geopolitical tensions between the U.S. and Iran early in the month drove oil prices and the U.S. dollar higher, triggering volatility across global markets. Gold, typically viewed as a safe haven, experienced sharp declines as margin calls and liquidity pressures forced selling.
Bitcoin, however, avoided similar stress. The asset gained roughly 1% during March, while gold fell around 11%. Connors attributed this to earlier deleveraging in crypto markets, which may have reduced the risk of forced liquidations. Bitcoin’s ability to move quickly across borders may also limit the kind of pressure seen in physical assets.
Looking ahead, the extended period of underperformance could set the stage for a reversal. Rolling 63-day data shows bitcoin has trailed the S&P 500 since October — a historically long stretch that has, in past cycles, preceded periods of outperformance.
If that pattern repeats, bitcoin could see renewed demand, particularly as macro pressures tied to rising debt levels and currency expansion continue to build.
Still, timing remains uncertain. The path forward is likely to depend heavily on geopolitical developments, particularly the trajectory of the Iran conflict and its impact on energy markets, liquidity and global risk sentiment.
As Connors put it, the recovery timeline could vary widely: “It’s either two months or two years.”
