CryptoQuant analyst Darkfost observed that the 30-day correlation between Bitcoin and the S&P 500 has turned negative since October 2025. The asset once regarded as a high-beta version of stocks is now moving in the opposite direction, marking what he calls an abnormal 'decoupling' phase.
Turning Point: $19 Billion Liquidation Resets Market Structure
On October 10-11, 2025, roughly $19 billion in leveraged positions were flushed out, with open interest dropping by about 70,000 BTC. This was not merely a price shock but a structural reset of risk appetite. Leverage ratios have not recovered since, market liquidity weakened, and traders turned defensive.
Equities vs. Crypto: Fundamentals vs. Liquidity
AI-driven profitability keeps equity markets resilient, while the crypto market continues to suffer from shrinking liquidity. Net outflows from spot Bitcoin ETFs further weaken institutional demand, turning ETFs into a source of selling pressure.
Capital Rotation Amid Geopolitical Tensions
When tensions escalated around Iran, equities fell, energy prices rose, and bond yields climbed — yet Bitcoin strengthened. Some capital rotated from stocks to Bitcoin as a short-term diversification tool. The crypto market had already de-leveraged, so new inflows now push prices more directly.
Structural Forces Driving Decoupling
Darkfost attributes the decoupling to structural differences in liquidity, leverage, and capital flows. Key factors to watch include ETF flows, open interest recovery, and the macro environment. The market is in a 'fragmented' rather than 'synchronized' phase.
Disclaimer: This content is for market information only and does not constitute investment advice.