Bitcoin Nears All-Time High vs S&P 500: A Decoupling of Markets or New Asset Class Ascendancy?

Julian WestTuesday, Apr 22, 2025 10:38 am ET
79min read

The cryptocurrency market has long been a volatile

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, but recent data reveals a seismic shift: Bitcoin (BTC) is nearing an all-time high relative to the S&P 500, driven by a synchronized selloff in equities and Bitcoin’s resilience amid macroeconomic turbulence. As of April 2025, Bitcoin’s price surged to $87,000, while the S&P 500 fell to 5,154, marking a historic divergence. This article explores the catalysts behind Bitcoin’s relative strength, its evolving relationship with traditional markets, and what it means for investors.

The Numbers Tell a Story of Decoupling

Recent performance metrics underscore Bitcoin’s outperformance:
- April 2025 Gains: Bitcoin rose 2.8% month-to-date, while the S&P 500 plummeted 7.2% (as of April 19).
- Correlation Collapse: The Santiment divergence coefficient between Bitcoin and the S&P 500 fell from 0.16% to 0.083% in two weeks, indicating Bitcoin’s price movements are now nearly independent of equities.
- ETF Performance: The iShares Bitcoin Trust ETF (IBIT) lost just 0.7% in April, compared to tech stocks like NVIDIA, which faced a $5.5 billion tariff-linked charge and a sharp decline.

Why Are Equities Selling Off?

The selloff in traditional markets stems from two primary forces:
1. Trade Policy Uncertainty: U.S. President Donald Trump’s imposition of tariffs on key industries in early April 2025 triggered inflation fears and a flight to safer assets.
2. Labor Market Resilience vs Fed Divergence: Strong U.S. jobless claims data (215,000 on April 12) contrasted with calls for Federal Reserve rate cuts, creating uncertainty for equities reliant on cheap borrowing.

Meanwhile, Bitcoin’s fixed-supply model and perceived inflation-hedging properties positioned it as a counterweight to equity risk, attracting capital fleeing volatile stocks.

Historical Context: Bitcoin vs S&P 500 Over Time

The current divergence is part of a broader trend. Over 14 years (2010–2024), Bitcoin’s Compound Annual Growth Rate (CAGR) was 167%, versus the S&P 500’s 12%. This outperformance is even starker over shorter periods:
- 5-year CAGR: Bitcoin at 44% vs S&P 500 at 14%.
- ROI (2010–2024): Bitcoin’s ROI was 96 million% vs the S&P 500’s 415%.

What Drives Bitcoin’s Resilience?

  1. Institutional Adoption: Companies like GameStop and Rumble began accumulating Bitcoin, signaling corporate recognition of its store-of-value potential.
  2. ETF Momentum: Bitcoin ETFs like IBIT drew $381.4 million in inflows on April 7, reflecting retail and institutional confidence.
  3. Policy Backing: Trump’s announcement of a U.S. Strategic Bitcoin Reserve lent legitimacy, even if initially underwhelming.

The Risks and Considerations

  • Volatility: Bitcoin’s 2022 crash (64% decline) reminds investors of its extreme swings.
  • Regulatory Uncertainty: Ongoing debates over Bitcoin’s legal status and energy consumption could impact its trajectory.
  • Equity Recovery Potential: If the Fed cuts rates or tariffs ease, equities might rebound, temporarily narrowing the Bitcoin/S&P gap.

Conclusion: A New Asset Class Emerges

Bitcoin’s near-record high relative to the S&P 500 signals a paradigm shift. With a 2.8% gain vs a 7.2% equity decline in April 2025, and a 167% 14-year CAGR versus the S&P’s 12%, Bitcoin is proving its worth as a distinct asset class—one that thrives when traditional markets falter.

Investors should note:
- Diversification: Bitcoin’s low correlation (now near zero) with equities makes it a valuable hedge against market downturns.
- Long-Term Play: Its historical outperformance suggests Bitcoin could continue to grow as a percentage of portfolios, especially during inflationary periods.
- Caution: High volatility demands disciplined risk management; Bitcoin is not a "set-and-forget" investment.

In a world of economic uncertainty, Bitcoin’s rise versus the S&P 500 is no fluke. It’s a testament to its evolution from a speculative curiosity to a legitimate alternative to traditional assets.

The data is clear: Bitcoin’s ascent isn’t just a correction—it’s a redefinition of what constitutes "safe haven" in 21st-century finance.