The S&P 500 has added nearly the same amount of value as the entire crypto market’s current market capitalization this month, yet bitcoin has shown little reaction. The reasons behind the disconnect are more complicated than they first appear.
U.S. equities have regained strong momentum, while bitcoin has continued to lag behind, extending a trend seen throughout 2026. The explanation goes beyond the simple idea that stocks and crypto are moving in opposite directions.
The S&P 500 has risen 3.12% this month, increasing its market capitalization by roughly $2.1 trillion and pushing its total valuation to a record $70.5 trillion, with the index trading near 7,723 points. The Nasdaq 100 and Dow Jones Industrial Average have also posted gains, reflecting strong investor confidence and a broad risk-on environment across Wall Street.
Bitcoin, however, has failed to keep pace. Although BTC has frequently moved alongside equities since the market recovery following the 2020 pandemic crash, the cryptocurrency has gained only about 2% this month. It remains around $64,600, close to the same level where it has traded for several weeks.
Analysts say bitcoin’s weaker performance is partly due to the nature of the current stock rally. Unlike broad macro-driven risk appetite that typically benefits assets such as BTC, the latest equity surge has been concentrated in specific sectors, especially artificial intelligence and semiconductor companies.
“Much of the equity rally is coming from areas where bitcoin has little direct exposure, particularly AI and semiconductor stocks,” said Adam Haeems, head of asset management at Tesseract Group, which manages more than $500 million in client assets.
Some macro factors are still supportive for risk markets. Falling oil prices and expectations of renewed shipping activity through the Strait of Hormuz after disruptions linked to the Iran conflict could provide relief. However, those benefits are reaching traditional markets faster than crypto.
Haeems explained that cheaper oil could support both equities and bitcoin, but the impact occurs through different channels. Stocks can benefit immediately from lower operating costs, while bitcoin’s reaction depends on inflation expectations and future Federal Reserve policy decisions, which may take longer to develop.
Paul Howard, senior director at market maker Wincent, also noted that the stock market rally has been driven mainly by AI-focused companies and mega-cap stocks, which does not automatically translate into crypto demand.
He said bitcoin’s previous rally was heavily supported by ETF inflows over the past two years, but that momentum has weakened as the crypto market searches for independent catalysts. According to Howard, regulatory clarity and continued growth in stablecoin adoption could become important drivers later in the year.
Bitcoin faces crypto-specific headwinds
Beyond broader market trends, bitcoin is also dealing with several crypto-related challenges that have pressured sentiment. These include the $120 million Coldcard wallet exploit, uncertainty surrounding the Clarity Act, and reports that Strategy has been reducing its bitcoin holdings.
Haeems said these developments have negatively affected market confidence but have not yet caused a wider credit event or triggered a major liquidation cycle.
He also highlighted rising bond yields as another challenge for crypto markets. Higher real yields are encouraging investors to keep capital in traditional fixed-income assets rather than deploying funds into digital assets.
Stablecoin supply has also weakened. Haeems pointed out that USDT circulation has fallen from about $190 billion in April to $183 billion, while USDC supply has declined from roughly $79.5 billion to $72 billion. With Treasury returns at their highest levels since 2008, investors have less incentive to move liquidity back into crypto markets.
Bitcoin cycle expectations and ETF uncertainty
Another factor influencing bitcoin’s muted performance is trader positioning around the four-year halving cycle.
Markus Thielen, founder of 10x Research, said many traders are waiting for a potential market bottom expected around October based on historical cycle patterns. This cautious positioning has reduced buying pressure despite strength in traditional markets.
“Bitcoin traders have shown little urgency to prepare for a move higher, even as U.S. stocks rally,” Thielen said. He added that many investors have recently returned to believing in the four-year cycle theory, leading them to remain on the sidelines.
Thielen believes traders may be overlooking a bullish signal: bitcoin has remained relatively stable despite a hawkish Federal Reserve backdrop.
He suggested that investors could be underestimating the possibility of a less aggressive Fed stance and the chance that the current bitcoin cycle bottom has already formed.
Other analysts point to inconsistent spot bitcoin ETF demand as a reason for BTC’s lack of momentum. U.S.-listed bitcoin ETFs recorded $61.53 million in outflows, ending a weak three-week stretch of inflows, according to SoSoValue data. Although funds attracted $626 million this week, the strongest inflow figure since early May, analysts say continued inflows are needed to confirm renewed institutional interest.
Vikram Subburaj, CEO of FIU-registered crypto platform Giottus.com, said several consecutive days of ETF inflows would be required to confirm a lasting recovery in institutional demand. He identified support for bitcoin near $63,000-$63,400, with resistance between $64,500 and $66,000.
Market maker Wintermute suggested that ETF inflows may not necessarily indicate strong bullish demand, as some activity could be related to arbitrage strategies rather than investors building direct bitcoin exposure.
The firm said ETF buying has been absorbed without significantly lifting prices, suggesting that spot market demand remains limited. Wintermute noted that traders have instead shifted toward individual crypto assets, with ZEC gaining 10.9% over the week and HYPE rising 5% during a period of weak broader market performance.
According to Wintermute, stronger market participation may require bitcoin volatility to decline further before a broader crypto recovery can take hold.
