Bitcoin Lagging S&P 500 and Nasdaq: Why Crypto Missed the Stock Rally

Bitcoin recorded its worst performance against U.S. stock indices in recent history during 2026. In the first half of the year, the cryptocurrency fell more than 30 percent and was trading below $59,000 at the end of June, while the S&P 500 and Nasdaq benefited from a concentrated AI rally.

Dramatic Value Loss Since October 2025

From its peak of over $126,000 in October 2025, the world's largest cryptocurrency lost around 40 percent by February 2026. By mid-June 2026, Bitcoin had fallen to $66,521.59 – a year-over-year decline of $39,100. Market capitalization shrank by more than $2 trillion since the October peak.

At the end of March 2026, Bitcoin recorded its longest underperformance series against stocks in its history. Historical data based on rolling 63-day periods suggested that such phases previously preceded sharp recoveries.

S&P 500 Outpaces Bitcoin Over Five Years

Over the five-year period from June 11, 2021 to June 11, 2026, the S&P 500 achieved a return of 71.3 percent, while Bitcoin delivered only 67.5 percent. In the six months before mid-June 2026, U.S. stocks moved "decisively ahead of Bitcoin" according to data analyses.

Goldman Sachs Research forecasted in January 2026 a total return of 12 percent for the S&P 500 with expected earnings per share growth of 12 percent as well. The index actually rose significantly through early October 2026, driven by a narrowly concentrated sector.

AI Stocks Dominate the Market

The strength of the S&P 500 in 2026 was based almost exclusively on companies in the artificial intelligence sector. According to a Jefferies analysis, AI firms generated over 80 percent of the index's annual earnings – without these companies, the S&P 500 would have risen by only 2 percent.

Earnings estimates for the AI sector rose more than 30 percent since mid-2025. Analysts expect AI companies to achieve average annual earnings growth of 38.5 percent through 2027, while the overall market is projected at 11.9 percent.

Massive Outflows from Bitcoin Funds

Spot Bitcoin funds recorded capital outflows of around $5.2 billion through June 29, 2026. By month-end, outflows totaled approximately $5 billion. Meanwhile, Bitcoin miners came under pressure: according to JPMorgan analysis, the cryptocurrency was trading below estimated production costs of $78,000 per coin.

MicroStrategy, one of the largest institutional Bitcoin holders, sold holdings for the first time in years in early June 2026 and prepared to sell additional Bitcoin worth $1.25 billion. Crypto exchange Binance lost its EU license in the same period under new regulatory requirements and became inaccessible to millions of European users.

Leverage Reduction Hits Crypto Market Harder

Forced deleveraging accelerated in early 2026 as Bitcoin fell below $70,000 in February. This deleveraging mechanism works differently in crypto markets than in equities: while stock markets can rise even with moderate earnings expectations, crypto markets respond primarily to liquidity and leverage changes.

U.S. stocks had not experienced the same speculative excesses as crypto markets and were therefore able to continue their rally. Bitcoin functions as a "high-beta barometer for global liquidity and fiat debasement," while U.S. stocks represent ownership in productive companies – currently dominated by the AI revolution.

Crypto Stocks Collapse

Stocks of crypto companies also suffered from market developments. Through June 30, 2026, Coinbase (COIN), Circle (CRCL), and Bullish (BLSH) each recorded share price losses of at least 21 percent since the beginning of the year.

Bitcoin underperformed U.S. stocks, gold, and crude oil in the first half of 2026. In year-over-year comparison with technology stocks and commodities, crypto became the worst-performing asset class of 2026.

Momentum Over Value: Investor Behavior Changes

Jim Ferraioli of Charles Schwab explained on a panel in June 2026 that crypto investors are more momentum chasers than value investors. Capital flows from fallen Bitcoin prices to faster-rising investments like AI stocks, gold, oil investments, and the SpaceX IPO (SPCX).

These structural differences between asset classes explain why they responded so differently to market conditions in 2026. While U.S. stocks benefited from concrete earnings increases in the AI sector, Bitcoin lacked this fundamental anchoring in productive corporate earnings.