When Wall Street Gallops and Bitcoin Stays Idle: The 2025 Puzzle

A surprising scenario is shaping the global markets in 2025: while the S&P 500 soars toward new all-time highs with gains exceeding 16%, Bitcoin remains trapped between $85,000 and $90,000, even recording a 3% contraction on an annual basis. This is the first time since 2014 that the Wall Street bull runs unabated while the king of cryptocurrencies remains stuck in a frustrating sideways phase. This phenomenon represents an unprecedented break in the dynamics of the global financial markets.

The Historic Divergence That Surprises Analysts

Historically, Bitcoin was considered the “barometer of risky assets,” the first indicator of the risk appetite of global markets. Those buying Bitcoin thought they were investing in the ultimate symbol of volatility, potential growth, and rotation into high-risk assets. In 2025, this pattern has completely reversed.

In the second half of the year, the contrast has become even more pronounced: Bitcoin’s price has fallen by nearly 18%, while the Nasdaq Composite has gained 21% and the S&P 500 14.35%. Bloomberg data reveal another surprising statistic: the longest streak of new daily highs for Bitcoin in 2025 was only 3 trading days, the weakest figure ever recorded during years of upward breakouts. Even during the harshest “crypto winters” of the past, Bitcoin maintained some synchronization with other risky assets; this time, it did not.

When ETFs Change the Rules of the Game

Among the structural factors explaining this anomaly, the impact of ETFs on Bitcoin deserves careful analysis. The introduction of exchange-traded funds has democratized access to Bitcoin for institutional and retail investors alike. Yet, it has also profoundly transformed market dynamics.

When investors can gain exposure to Bitcoin through conventional channels—such as products managed by professional wealth managers—they lose interest in publicly traded companies that built their appeal around the concept of “pure cryptocurrency.” Companies once highly sought after by crypto enthusiasts have seen their speculative attractiveness erode. Simultaneously, capital flows into Bitcoin during “speculative hype” cycles have cooled significantly, as evidenced by the slowdown in inflows into dedicated ETFs.

Regulatory Uncertainty: An Invisible but Powerful Brake

Initially, the Trump administration generated hope in the crypto sector with favorable statements about cryptocurrencies. However, the regulatory framework has yet to take concrete and practical shape. The “Clarity Act,” approved by the House of Representatives to establish clear rules on digital assets, remains stalled in the Senate with uncertain prospects. Without a defined voting schedule and with the need for further revisions, initial optimism has turned into waiting and caution.

Meanwhile, the European Union and Asian authorities have intensified their oversight of exchanges and stablecoins, fueling further concerns about the global regulatory environment. This regulatory uncertainty weighs like an anchor on Bitcoin’s ankle, preventing it from syncing with the euphoria of traditional markets.

The Paradox of Liquidity and Leverage

A major liquidation event in early October wiped out about $19 billion of leveraged positions in the crypto market, exposing the structural fragility of highly leveraged markets. At the same time, changes in the Federal Reserve’s monetary policy have altered global liquidity flows in unpredictable ways.

In a sense, Bitcoin has fallen victim to its own nature: when traditional financial markets offer certain yields and visibility of corporate profits—like in the case of the US stock market in 2025—sophisticated investors prefer to shift capital into more predictable instruments. Meanwhile, Bitcoin remains an asset where leverage dynamics, limited flows, and the absence of fundamental cash flows make it more vulnerable to liquidation waves.

The Stock Market Finds Its Compass in Real Profits

In stark contrast, the US stock market has benefited from two factors that Bitcoin lacks: solid corporate profits and a vision of structural growth. 69% of S&P 500 companies that reported earnings beat analyst expectations— the highest rate in four years. This has provided a rational basis for Wall Street’s optimism.

AI-related companies, with Nvidia at the center of the narrative—becoming the first company to surpass a $4 trillion market cap on July 9—have crystallized investor confidence in a vision of tangible technological progress. Even when potential risks emerge—from inflation to trade tensions and geopolitical conflicts—the stock market maintains a sort of “risk desensitization,” a stance some analysts call the “TACO trade”: the widespread belief that “Trump Always Chickens Out” from his trade threats, allowing the market to temporarily ignore dangers.

How Institutional Investors Are Recalibrating Their Strategies

Mike McGlone of Bloomberg Intelligence summarizes current institutional sentiment with a blunt phrase: “The stock market and gold are at all-time highs, while Bitcoin, the quintessential risk asset, is melting away.” This marks a shift in the narrative among financial institutions.

Matthew Hougan of Bitwise Asset Management adds an even gloomier note: “Retail sentiment is terrible, and the market could still decline significantly.” Capital inflows into Bitcoin ETFs are slowing markedly, and the support once provided by prominent institutions and influential figures has weakened considerably.

However, not everyone agrees with this pessimistic view. Stéphane Ouellette of FRNT Financial argues that Bitcoin’s underperformance is mainly due to its previous rallies having vastly outperformed other assets. Over a two-year horizon, Bitcoin has still crushed the S&P 500 in terms of performance, and the stock market is simply “catching up” to crypto gains. Even Standard Chartered has revised its outlook downward: it lowered its year-end price forecast from $200,000 to $100,000 and pushed back its long-term targets from 2028 to 2030.

What Could Turn the Table?

Three key variables will dominate market evolution in the coming months. The first is the outcome of the “Clarity Act” in the US Senate: regulatory clarity could restore confidence among institutional investors and give Bitcoin a boost. The second concerns changes in the global liquidity environment: with the resolution of the US government shutdown, liquidity flows could return to riskier assets. Derek Lin of Caladan reminds us that Bitcoin bull markets in 2017 and 2021 were driven not only by halving but also by more powerful fundamental factors: abundant global liquidity.

The third variable is structural: Bitcoin is increasingly perceived as a macro asset in institutional portfolios rather than a speculative toy. This means its reaction will be increasingly driven by factors such as liquidity, monetary policies, and the dollar’s trend, rather than traditional crypto supply shocks or community debates.

Jack Kenneth of Nansen summarizes the change: “Today, Bitcoin trading increasingly resembles that of a macro asset in institutional portfolios, reacting more to liquidity, policies, and dollar trends than to supply shocks.”

While Wall Street continues to interpret the bull market with confidence, Bitcoin investors are scrutinizing charts for a breakout point between support at $85,000 and the previous all-time high of $126,080, waiting for the catalyst that will restart the next cycle.