Bitcoin’s first-quarter plunge capped an unusual rally: nearly six months of unprecedented underperformance relative to U.S. stocks.
“This has never happened before,” said Mark Connors, founder of Risk Dimensions, pointing to data showing that Bitcoin has lagged stocks since early October. The trend raises 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 after falling 25% in the last three months of 2025. During the same period, the S&P 500 declined by much less, with a wide gap in performance. Connors said the duration of the gap, not just its size, is striking. Previous pullbacks were larger but shorter.
The weakness comes amid broader market woes. U.S. stocks had their worst quarterly performance in four years, with the Nasdaq down more than 10% from its recent high. The combined decline in stocks and cryptocurrencies has erased much of the post-2024 election gains.
Policy progress has been uneven. The new SEC chairman has helped clear the way for more crypto ETFs, and lawmakers have proposed progressive measures such as the GENIUS Act. Trump also signed an executive order in August to make it easier for 401(k) plans to include alternative assets such as cryptocurrencies, private equity and real estate, and the Labor Department proposed a rule on Monday in response.
March shows signs of stabilization
Despite a weak quarter, Bitcoin performed better in March than many expected.
An escalating conflict between the United States and Iran rattled global markets in early March, sending oil prices and the dollar higher as investors reacted to supply risks and rising costs.
Volatility has triggered wild swings across asset classes. Gold is typically viewed as a safe haven, but it has seen wild swings as margin calls and emergency liquidity needs forced institutional investors and sovereign entities to sell. The scale of the move ranks among the worst short-term disruptions in decades.
However, Bitcoin did not experience the same degree of liquidation. Cryptocurrencies rose about 1% in March, while gold fell 11% during the same period. “It really hangs in there,” Connors said.
He attributes some of that stability to previous liquidations of leveraged positions. Bitcoin’s ability to move quickly across borders may also limit forced selling compared to physical assets.
Outlook: “Coil Spring”?
Looking ahead, Connors pointed to Bitcoin’s long-term underperformance relative to stocks as a factor that could influence what’s next. Rolling 63-day data shows the asset has lagged the S&P 500 since October – its longest period on record – an imbalance that has historically reversed itself.
If this pattern holds true, Bitcoin could enter a phase where relative weakness gives way to new demand, especially as macro pressures related to debt and monetary expansion continue to increase.
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.