Bitcoin’s first-quarter decline capped an unusual run: nearly six months of underperformance against U.S. stocks, an unprecedented stretch.
“That’s never happened,” said Mark Connors, founder of Risk Dimensions, pointing to data showing that bitcoin has consistently lagged stocks since early October. The trend has raised new questions about whether the asset behaves more like a risk trade than a hedge.
Bitcoin fell about 22% in the first quarter of 2026 after falling 25% over the last three months of 2025. Over a similar period, the S&P 500 fell far less, leaving a large performance gap. Connors said the duration of this gap, not just the size, stands out. Previous pullbacks have been sharper but shorter.
The weakness came amid broader market struggles. US stocks posted their worst quarter in four years, with the Nasdaq down more than 10% from recent highs. The combined decline across stocks and crypto 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 such as the GENIUS Act. Trump also signed an executive order in August that would make it easier for 401(k) plans to include alternative assets such as cryptocurrencies, private equity and real estate, which the Labor Department proposed a rule on Monday in response.
March shows signs of stability
Despite the weak quarter, bitcoin held up better in March than many expected.
The escalation in early March between the US and Iran sent shockwaves through global markets, driving up oil prices and the US dollar as investors reacted to supply risks and rising costs.
The volatility triggered sharp movements across asset classes. Gold, often treated as a safe haven, saw extreme volatility as margin calls and urgent liquidity needs forced both institutional investors and sovereigns to sell. The scale of the move was among the most severe short-term dislocations in decades.
However, Bitcoin did not experience the same level of forced liquidation. The crypto rose about 1% in March, while gold fell 11% in the same period. “It really hung in there,” Connors said.
He attributes this stability in part to previous liquidations that removed leveraged positions. Bitcoin’s ability to move quickly across borders can also limit forced sales compared to physical assets.
Outlook: A “coiled spring”?
Looking ahead, Connors pointed to bitcoin’s extended underperformance relative to stocks as a factor that could shape what’s next. Rolling 63-day data shows the asset has lagged the S&P 500 since October — the longest such period on record — an imbalance that has historically preceded reversals.
If this pattern holds, bitcoin may be entering a phase where relative weakness gives way to renewed demand, especially as macro pressures linked to debt and currency expansion continue to build in the background.
However, the timing may depend less on market structure and more on geopolitics. The trajectory of the Iran conflict and its impact on energy markets, liquidity and global risk appetite may determine how quickly sentiment shifts.
“It’s either two months or two years,” Connors said.
