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- Bitcoin shows a 3-month correlation break from the S&P 500 and Gold.
- Bitcoin price movement to S&P 500 suggests undervaluation, as the leading coin exhibits upside potential.
Recent data from the on-chain data platform Santiment showed a clear correlation break between Bitcoin (BTC) and the S&P 500. According to the data, Bitcoin is arguably undervalued, and some market participants claim the coin is weak.
Bitcoin Breaks Correlation to S&P
In an X post, Santiment highlighted that Bitcoin has broken its historical correlation to the S&P 500 and Gold. Over the past three months, Bitcoin has been moving in quite the opposite direction from these benchmark assets.
However, Santiment suggested that this break from historical patterns could signal a buying opportunity for BTC.
Santiment shared a chart that showed the S&P 500 rose 7%, while Gold also increased by 21% since August 11. However, Bitcoin declined by 15% within the same timeframe.
Bitcoin is known for its extreme volatility, with visible price swings in different time frames. The leading crypto asset plunged over 64% in 2022 and then rallied 160% in 2023. This volatility can be challenging for crypto traders.
On the other hand, the S&P 500 offers more stable performance and serves as a benchmark for the U.S. economy.
Still, Bitcoin showed a strong positive correlation with the S&P 500 from roughly late 2020 to mid-2025. This meant BTC often amplified stock market moves, rising more sharply during bull runs and falling harder during downturns.
Factors driving this included institutional adoption and macro events such as Fed rate hikes and geopolitical tensions.
As of writing, BTC price was trading at $104,664.37, up 0.5% in 24 hours.
The Bitcoin correlation with the S&P 500 began to drop in Q3 and extended to Q4, driven by factors like ETF outflows. In a previous article, we discussed that Bitcoin decreased by 5.9%, while the S&P 500 surged 0.4% during the same period.
Is Bitcoin Undervalued or Weak?
Therefore, the three-month correlation break suggests Bitcoin is underperforming the S&P 500 as investors favored stability and growth. It also implies that the Bitcoin price movements are largely independent of traditional markets.
However, Santiment argued that if BTC has historically moved with equities, its current lag to the S&P 500 suggests undervaluation. The data and analytics platform believes the correlation break is not due to BTC weakness but crypto-specific headwinds.
If fundamentals like growing adoption and a potential 2025-2026 bull cycle remain, BTC could catch up once sentiment shifts.
Furthermore, the 3-month decoupling could signal BTC maturing as an independent asset, less tied to stocks. Consequently, investors might view it as an opportunity to buy the dip, eventually leading to higher prices.
Meanwhile, the Binance exchange has reported a spike in Bitcoin withdrawal transactions. As mentioned in our previous news brief, the surge suggests renewed accumulation by whales and institutions, rather than short-term traders.
The Bitcoin whale accumulation implies confidence among institutional players for future price jumps. This could help boost retail sentiments for the leading coin.
