Bitcoin’s latest slump has created an unprecedented streak: nearly six months of underperformance versus U.S. stocks, a run that “has never happened,” according to Mark Connors, founder of Risk Dimensions. Data showing bitcoin consistently trailing the S&P 500 since early October highlights a rare and potentially meaningful shift in the market’s behavior.
By the numbers: bitcoin fell roughly 22% in Q1 2026, adding to a roughly 25% drop in Q4 2025. Over that same span, the S&P 500 declined far less, leaving a pronounced performance gap. Connors says it’s the duration of the lag—not just the size of the losses—that stands out. Previous bitcoin drawdowns have often been steeper but shorter-lived.
The crypto weakness arrived against a tough backdrop for risk assets. U.S. equities posted their worst quarter in four years, and the Nasdaq is more than 10% below recent highs. The combined retreat in stocks and crypto has largely erased much of the post-2024 election rally.
Policy developments have been mixed but consequential. A new SEC chair has paved the way for more crypto ETFs, lawmakers advanced the GENIUS Act, and last August an executive order from former President Trump aimed to make it easier for 401(k) plans to add alternative assets—including cryptocurrencies. The Labor Department responded with a proposed rule this week that could further influence retirement-plan access to crypto.
March offered an unexpected stress test. Geopolitical escalation between the U.S. and Iran sent oil and the dollar higher and sparked volatility across markets. Gold—typically a safe haven—experienced extreme swings as margin calls and liquidity needs forced large sales, producing one of the most violent short-term dislocations in decades. Over the month, gold plunged about 11% while bitcoin rose roughly 1%—a relative resilience that surprised many.
Connors credits that stability to earlier liquidations that purged leveraged positions and to bitcoin’s unique, frictionless liquidity across borders, which can reduce forced-selling pressure compared with physical assets. In other words, bitcoin’s structure may have helped it absorb shocks without the same degree of forced unwinding seen in other markets.
Looking forward, the prolonged lag against equities could set the stage for a reversal. Rolling 63-day data show bitcoin has underperformed the S&P 500 since October—the longest such stretch on record—and such imbalances have historically preceded rebounds. But timing is the big unknown. Macro stresses tied to debt and currency expansion could build renewed demand for crypto, yet geopolitics—especially developments in the Iran conflict and resulting impacts on energy prices, liquidity, and risk appetite—may determine whether a turnaround comes in “two months or two years,” as Connors put it.
Bottom line: bitcoin’s recent performance has shifted the narrative from a short-lived crypto pullback to a historically long period of relative weakness versus equities. That creates both risk and opportunity—how quickly it resolves will likely hinge on policy progress and global geopolitical developments.
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