Bitcoin Shows Diverging Path from U.S. Equities Amid Rising Market Volatility

In Wednesday’s trading, Bitcoin (BTC) and U.S. equities displayed signs of a weakening correlation, catching the attention of investors as market turbulence grows.

A diversified portfolio typically includes assets with little to no correlation. For instance, gold has recently surged to new all-time highs, setting 12 daily records this year, while U.S. equities have shown weaker performance, indicating a clear separation between the two.

Bitcoin, once seen as a leveraged play on the Nasdaq 100, now appears to be drifting from that pattern.

A clear example of this shift came with BlackRock’s iShares Bitcoin Trust (IBIT), which trades within U.S. market hours. While the Nasdaq 100 suffered a sharp decline of over 3%, at one point plummeting by 4.5%, IBIT managed to close up by 0.46%.

Similarly, MicroStrategy (MSTR), a Bitcoin-exposed stock within the Invesco QQQ Trust (QQQ), rose by 0.30%, even though the leading tech stocks—referred to as the Magnificent Seven—closed the day in the red, further signaling the growing divergence between Bitcoin and traditional equities.

The correlation between Bitcoin and the Nasdaq fluctuated throughout the day. During remarks from Federal Reserve Chair Jerome Powell, both assets dropped in tandem. However, Bitcoin later surged above $84,000, while the Nasdaq continued its downward spiral before recovering slightly into the close.

Powell’s comments took a hawkish tone, with the Fed chief expressing concerns over inflation driven by tariff risks and price increases, labeling them as “evolving risks.” This led to a rise in short-term inflation expectations.

Markets were particularly unsettled by Powell’s response to a pressing question: Will the Fed intervene to support the stock market during declines? His response was blunt: “I’m going to say no.”

The concept of the “Fed put”—the theory that the Federal Reserve would step in to stabilize markets in times of crisis—has been a long-standing belief in market circles. Bitcoin, however, as a bearer asset, lacks this cushion. The question now: Was Powell’s response a warning, or is the Fed truly stepping away from its role as a market stabilizer?