Bitcoin’s decline in the first quarter ended an unusual streak: almost six months of underperformance against US stocks, a stretch that is unprecedented.
“That has never happened,” said Mark Connors, founder of Risk Dimensions, pointing to data showing bitcoin stocks have consistently lagged since early October. The trend has raised new questions about whether the asset is behaving more like a risk trade than a hedge.
Bitcoin fell about 22% in the first quarter of 2026, following a 25% drop during the last three months of 2025. During a similar period, the S&P 500 fell much less, leaving a wide performance gap. Connors said what stands out is the duration of that gap, not just the size. Previous pullbacks have been steeper but shorter.
The weakness came amid broader struggles in the market. US stocks posted their worst quarter in four years, with the Nasdaq falling more than 10% from recent highs. The combined decline in stocks and cryptocurrencies erased much of the rally that followed the 2024 election.
Political progress has been uneven. A new SEC chair has helped clear the way for more crypto ETFs, and lawmakers have advanced measures like the GENIUS Act. Trump also signed an executive order in August that would make it easier for 401(k) plans to include alternative assets like cryptocurrency, private equity and real estate, to which the Labor Department proposed a rule in response on Monday.
March shows signs of stability
Despite the weak quarter, bitcoin held up better in March than many expected.
The early March escalation between the United States and Iran sent shockwaves through global markets, sending oil prices and the US dollar higher as investors reacted to supply risks and rising costs.
Volatility caused strong movements in all asset classes. Gold, often treated as a safe haven, saw extreme swings as margin calls and urgent liquidity needs forced selling by both institutional investors and sovereign entities. The magnitude of the move was among the most serious short-term dislocations in decades.
Bitcoin, however, did not experience the same level of forced liquidation. The cryptocurrency rose around 1% in March, while gold fell 11% during the same period. “It really held up,” Connors said.
He attributes that stability in part to previous liquidations that cleaned up leveraged positions. Bitcoin’s ability to move quickly across borders may also limit fire sales compared to physical assets.
Perspectives: A “coiled spring”?
Looking ahead, Connors pointed to bitcoin’s prolonged period of underperformance relative to stocks as a factor that could shape what comes next. The 63-day rolling data shows that the asset has lagged the S&P 500 since October (the longest period on record), an imbalance that has historically preceded reversals.
If that pattern holds, bitcoin could be entering a phase where its relative weakness gives way to renewed demand, particularly as macroeconomic pressures tied to debt and monetary expansion continue to build in the background.
However, the timing may depend less on market structure and more on geopolitics. The trajectory of the Iranian conflict and its impact on energy markets, liquidity and global risk appetite could determine how quickly sentiment changes.
“It’s two months or two years,” Connors said.
