Wintermute: BTC trading is more bearish than stock indices, and the upside narrative premium no longer exists

ChainCatcher News, the latest report from Wintermute points out that the correlation between Bitcoin and the Nasdaq Index remains as high as 0.8, but Bitcoin's trading trend is more bearish than the stock index, reacting much more to market pessimism than to optimism. This year, on days when the stock market declines, BTC's drop is generally larger than that of the stock index, while on days when the stock market rises, Bitcoin's gains are smaller. The last time this pattern appeared was during the bear market in 2022. Wintermute states that there are two main underlying factors causing this phenomenon:

For most of 2025, funds that would typically flow into the crypto sector (including new token issuances, infrastructure upgrades, and retail participation) have shifted to the stock market. Large-cap tech companies have become the focus for institutions and retail investors seeking high beta/high growth. When global risk sentiment shifts, Bitcoin is still correlated, but when optimism returns, it fails to benefit proportionally. It acts more like a "high beta tail" of macro risk rather than an independent narrative; the downside beta effect still exists, but the upside narrative premium is gone.

Currently, the liquidity situation in the crypto market is different from previous risk cycles. Stablecoin issuance has stabilized, ETF inflows have slowed, and market depth on trading platforms has yet to recover to early 2024 levels. This vulnerability amplifies the negative reaction during stock market pullbacks. As a result, Bitcoin's participation in declines remains higher than in rallies, further exacerbating this performance deviation.